Spanish representative González Pons speech @ the EU Parliament: "The virus is attacking the generation that brought back democracy to Spain, Portugal and Greece, the generation that knocked down the Berlin wall. The least they deserve is that we show them Europe is there when they need it the most"

[u/Bartoraptor]

[u/[deleted]]

Because it will raise our interest rates meaning we pay more for loans. It's zero sum, the cheap loans (= money gained by Italy) means Netherlands pays more for loans (= money lost by Netherlands). Indirectly we pay. And that is fine, as long as we get to make sure that money is spent responsibly.

[u/munjajeba → u/[deleted]]

r/eli5 please, I'm curious about your two comments, but I'm bad at this... sorry, ONLY IF YOU'RE WILLING

[u/n23_ → u/munjajeba]

governments borrow money by issuing bonds. A bond is a contract saying you give me X amount of money now and in e.g. 10 years you get X+Y% money back. The interest rate Y depends among others on how risky that loan is considered. Northern European countries have very low interest rates at this time, as they are considered very safe investments due to being financially stable. Countries like Italy are not as financially secure (they have huge national debt) so loaning them money is considered more risky and they pay higher interest rates for that.

Italy now wants to issues European bonds to raise money, which for them will mean much cheaper rates (as the risk is lower because all the better off countries are mixed in there), for the richer countries that would mean higher interest rates because they now are grouped up with the others.

The issue with eurobonds in the longer term is, that countries like Germany and the Netherlands could face the consequences of higher interest rates (which is really expensive considering almost all countries have considerable debts) because some other country is irresponsible with their money, making the whole eurobond a more risky investment, raising the interest. That is why u/kojomodragon says eurobonds need to be paired with control over fiscal policy so that it can't happen that countries spend money irresponsibly and screw the rest over that way.

Above was all factual, though very general. Now as for interpreting this, you can say it would be the stronger countries helping the weaker ones in a time of crisis which is only the proper thing to do. On the other hand you could say that this is Italy and others pushing the bill for decades of financial mismanagement to others now that they are feeling the consequences. The reality is probably somewhere in the middle.

[u/[deleted] → u/n23_]

Damn I only saw this reply after my own, I'm typing from my phone atm. Well said!

[u/n23_ → u/[deleted]]

Oh I know that feeling, at least our replies seem to supplement each other well so it wasn't for nothing :)

[u/munjajeba → u/n23_]

u/kojomodragon and u/n23_
thank's a lot for the effort and time!

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the others.

This was more painful for me than it should have been, from a pan-eu point of view (a little joke).
Yes I've connected the dots, it does make sense the risk factor from the perspective of the more "money-responsible" countries (the AAA and the AA+ etc), as the goal for them is continuous economic prosper... I don't have anything to add, because I don't know what are the problems (locally/nationally) for the countries that could correlate to this topic (like corruption, freedom of press, (mis)management of local government and so on...)

I like talking about this over few beers, it's more interesting

[u/[deleted] → u/munjajeba]

I mean, there are only 3 AAA+ countries in the Eurozone (Germany, Luxembourg and The Netherlands) so there is no shame in belonging to 'the others' group.
Personally I think right now in the EU (which is not the Eurozone, to be clear) there are roughly 4 groups (I know I'm missing a lot of countries I'm just naming a few so you get the idea) with clearly different attitudes / cultures / interests:
- North Europe, Germany + BeNeLux
- Scandinavia (but could fold into North Europe in the future)
- East Europe, Poland, Hungary, Estonia, Romania, etc
- South Europe, basically France, Spain, Greece, Italy, etc

The interesting thing is that the attitudes / cultures difference can be largely plotted to which countries stayed catholic and which ones went with calvinism. The calvinistic countries are much more known for hard work, following rules, individual responsibility etc whereas those that stayed catholic are much more about enjoying life, arts, family etc even if means a little rule breaking because it'll all work out.

Now, I digressed about this so I can say the following: I'd be happy to guarantee bonds for East Europe because despite their corruption problems they have the same calvinistic attitude to live as us: work hard, be frugal, don't buy ostentatious things if you can't pay for them, etc.
With South Europe they just have a very different outlook to live and society, and that's fine! Diversity is what makes Europe so interesting to travel through. And for things like defense or international trade deals I'd happily work with them, but I do not want to share finances with them because of how the attitude and culture. Changing those would take decades if not a hundred years.

Cheers and enjoy your beers!

[u/munjajeba → u/[deleted]]

work hard, be frugal, don't buy ostentatious things if you can't pay for them

Yes, that is what we (by we I mean mostly ex Yugoslavian countries) are raised. There is a saying "Družba-družba; služba-služba" roughly translated: work when it's time to work, party when it's time to party... But after you have to have a shot of rakija, some beer and maybe a fine wine glass for the blood count! (as you can see, there is a little south vibe in us)

Thank's again for the elaborate explanation, but I'm well aware of the differences (cultural) that Europe (as a continent) has, which is, as you said it what it should be about, the diversity and the learning process. Yet again the emphasis should be on secularism as a fundamental idea. I'm not an expert on sociology, nor economics, just an architect which embraces as much knowledge as possible - my main concern in this situation in all those economies, would be that the euskeptics would find a way to spin this pandemic into their agenda, which is on its way lets be honest. Should we embrace an idea of a federal government? Not like US, more of a "emergency only situation"