Thanks to influenza, I am sitting in my bed with my MacBook. As I drank my coffee this morning, I read the business part of the SZ. A few items stuck in my memory – and those led to some ideas
On page 1 of the business section, I found the following sentence:
The German stock index DAX lost 5 % and fell to 5,923 points. That was the lowest in eleven months.
For me, this means: yesterday’s DAX notation was as high as eleven months ago. What is wrong with that? The interim boom, which, after all, was strongly based on special influences such as extraordinary car exports to China, is probably now at an end. And if the stock prices keep falling and maybe get as low as they were 24 months ago, what is so terrible about that?
I assume that currently it can be said that the sellers bought at a lower price than they are selling today. Thus, they will add a nice profit to the dividend. And when the lowest level has been reached, probably around 3,000 or 4,000 points, then it will start climbing slowly again. So what is all the fuss about?
A little down the page, I find a graphical overview of countries with AAA rating.
The number is now SEVENTEEN MINUS ONE , it says. With the “one”, they mean the USA. Among the 16 that (still) have AAA, you can find seven countries inside the EURO zone. They are Denmark, Germany, Finland, France, Luxembourg, Austria and the Netherlands.
Other European non-EURO countries, too, have the AAA: Liechtenstein, Great Britain, Norway, Switzerland and Sweden.
Well, I understand that Norway gets AAA, because of its enormous wealth in oil and gas. I can also understand about Switzerland, even though one might ask what will happen if the Swiss Franken continues to climb so much and thus Switzerland will no longer be able to compete?
But I can certainly not understand why Great Britain got an AAA. I visited Wales a short time a go.
But back to the EURO zone:
Is France really worthy of getting an AAA?
I also have my doubts about Germany. Looking at the capital cities of the individual states, I wonder who of them has deserved an AAA. Berlin, Bremen and Hamburg certainly have not. But also some Bavarian cities (Würzburg) can hardly have AAA. I used to believe the entity is made up of parts that somehow belong together?
Or maybe the German AAA is based exclusively on Bavaria and Baden-Württemberg? Regardless of the risks still going with BayernLB?
What will happen if one country after the next will be freed from their debt by a clean cut?
Relatively spoken (in per cent of the GDP), the debt of the EURO zone countries are not too far apart. On top of the list, you will (still) find Greece with 142 % and Italy with 119 %. Best off are the Netherlands with 63,7 %. Countries like Belgium, Germany, France and Portugal range between 80 and 100 % (all numbers on the GDP 2010, source: FAZ of last weekend).
So if Greece is liberated of its debt, then common sense would tell us that the Greek numbers will look better. The credit granters, however, will loose money. Consequently, they will have to take up more money – which means that their rating number will get worse. I presume that the nation most affected would be Germany.
If now one country follows the other (Italy, Ireland, Portugal, Spain…) in getting subsidized by the EZB (because the EZB buys their problematic papers), if they then were to get a debt cut and in addition – as opposed to us – were to start economizing, then this would mean that the rating numbers for those countries would eventually be better than those of Germany, wouldn’t it?
In theory Germany might well end up being the sole money lender at the end of the process and having to declare insolvency as the last and only country. To be sure, this is nonsense, because the “market” would regulate it before it came to that.
Germany is the country that benefited most from the EURO.
If this were true – personally, I have my doubts, because, after all, we are not all that well off, either, just think of all the debt we have and other unsolved problems – then the next questions that comes to mind would be:
For whom was the EURO most detrimental?
There is a simple answer: those countries that are now in the pillory.
Well, and if in the end the Germans would have to pay, the entire story might have a fair ending.
(Translated by EG)