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Si1

Mass Immigration Into Europe And Real Interest Rates

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Whilst putting aside the practicalities and political fairness of Germany's response to the middle Eastern refugee crisis ( there's a thread in off topic for that), a broad economic issue goes begging:

Is the inevitable decadal or so cost of massive poverty-motivated immigration, as an isolated question aside from the morals, is this cost positive or negative to real interest rates?

In my partial attempt for the beginning of an answer, here are several points. 1. Germany is bearing a very large part of the cost. Will this reverse its mercantilist economy, provide less lent money for other nations, and in this aspect push up the cost of money? 2. A greater debt burden for other nations, higher decadal default risk, again push up interest rates? 3. The short term economic cost, force central banks into more extreme funding measures like more QE, which has a negative pressure on interest rates?

Thoughts?

Edited by Si1

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Not sure what metric Germany uses to manage its interest rate, but if inflation based I would presume a population jump would push asset prices up. Mainly housing as more people chase the same number of properties.

Edited by libspero

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Not sure what metric Germany uses to manage its interest rate, but if inflation based I would presume a population jump would push asset prices up. Mainly housing as more people chase the same number of properties.

But how would that impact interest rates over the same timescale? Or are IRs unaffected by sudden shifts in intrinsic demand for property?

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They probably reached the quota.

Migrant crisis: Germany to start temporary border controls

Germany is to introduce temporary controls on its border with Austria to cope with the influx of migrants, the interior minister has said. Thomas de Maiziere said refugees could "not choose" their host countries and called on other EU states to do more. Trains between Germany and Austria have been suspended for 12 hours. Germany's vice-chancellor has said the country is "at the limit of its capabilities" as more than 13,000 migrants arrived in Munich on Saturday. Germany expects 800,000 migrants to arrive this year.

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Someone being interviewed on the radio yesterday was claiming that it all meant the end of the Schengen Agreement, effectively.

Edited by billybong

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Given the high unemployment amongst the current immigrants I would expect much more government borrowing and an upward pressure on rates.

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Whilst putting aside the practicalities and political fairness of Germany's response to the middle Eastern refugee crisis ( there's a thread in off topic for that), a broad economic issue goes begging:

Is the inevitable decadal or so cost of massive poverty-motivated immigration, as an isolated question aside from the morals, is this cost positive or negative to real interest rates?

In my partial attempt for the beginning of an answer, here are several points. 1. Germany is bearing a very large part of the cost. Will this reverse its mercantilist economy, provide less lent money for other nations, and in this aspect push up the cost of money? 2. A greater debt burden for other nations, higher decadal default risk, again push up interest rates? 3. The short term economic cost, force central banks into more extreme funding measures like more QE, which has a negative pressure on interest rates?

Thoughts?

I did see a rather interesting piece by robert kagan on this somewhere, with a rather scathing indictment of obama trying to "europeanise" uncle sam(same really applies to us too)

basically said the divergence between US and europe

US believed at some point military force would be needed to protect their continent

EU believed they wouldn't,and all would be fine and dandy with social programmes.

I think the US win this one, absent 2 things:

1)the "apeshit" response that draws international outrage and condemnation at turning the middle east into a gigantic charcoal briquette.

2) the likes of feinstein trying to ban all guns for everyone else, except for her own bodyguards.

if the yanks have any sense,then they should run on a ted cruz/rand paul ticket for the next election.

bush and hitlery clinton are damaged goods

vote bush you get option 1

vote clinton you get option 2.

Edited by oracle

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