Angela Merkel: Herding Cats Over A Cliff
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  • werbaz neutron

    Perhaps one cannot herd all the different animals, reptiles, birds in the zoo into a single cage and expect them all to survive.

    Mother advised that “three can’t play.”

  • Sam

    So, Walt, you’re buying European soverign debt now?

  • Snorri Godhi

    “The latest European plan to fix the euro is already falling apart, just like all its predecessors have done.”

    There is no question that it is falling apart, but am I the only non-German speaker who thinks that this latest plan, in spite of the hype, was never meant to fix the euro, but only to reassure Germans that the money they are spending is not wasted?

    “Countries like Greece, Italy, Spain and even France need significantly cheaper currency to help them manage their debts and launch a reform process.”

    Maybe it’s my anti-Keynesian instincts, but I think that these countries would be better off with a currency *stronger* than the euro: they should return to a gold standard.

    Anyway, people in Greece and Italy do not want to leave the eurozone, and I suspect that’s because they, unlike Dr. Mead, know what “competitive” devaluation means in practice.

  • dearieme

    What is your reason for believing that Bismerckel is disinterestedly acting for the benefit of all Europe? It’s pretty unlikely.

  • Jake Peachey

    Note the broad similarities of the 2008 financial crisis in the US and the current dilemma in Europe. A large part of Western economies is the financial system, which at its very core is a pyramid scheme known as fractional reserve banking. Through the process of debt formation, the multiplying and renting of money can be a very profitable business. But the pressure for bank profitability tends to cause excess risk-taking in the pursuit of income-producing assets — dicey loans. This feature of vulnerability for the banking industry is aided and abetted by politicians for their political ends.
    The banks in America were pressured to make real estate loans to people who couldn’t afford it, and the European politicians encouraged lending to states becoming insolvent by waiving loan reserve requirements for sovereign debt to keep in obviously unsustainable problem from blowing up while they are in office or seeking reelection.
    The problem in the Europe has nothing to do with European Union per se — any more than the housing crunch has anything to do with the federal system of United States of America. If one of the states in America goes broke, due to feckless management of public policy by the leftist/ progressive/ socialist politicians, does that mean the federal system of America should also dissolve?
    What is needed is a central bank system with a charter that has ability of enforcing good discipline on all the banks and the independence to resist the pressures of politicians to either inflate the currency or push the banking industry to ruinous lending policies.
    The idea here is that, at some point early in the game, the independent central bank would’ve stopped continued loans to Greece until the Greeks get their financial house in order. The situation should never been allowed to deteriorate to the current state.

  • teapartydoc

    Herding cats? No, like any other parricide, the Euro should be bagged up with a dog, a monkey, a chicken, and a snake and thrown into the Tiber. And the sooner the better. A well-worked-out divorce is better than cleaning up after a murder-suicide.

  • It’s funny how almost everybody can diagnose a host of ways for their system to fail but nobody, even their leaders, can really pin a spin that sounds like success. And our potential harm? Where is Congress demanding to know how many banks hold Greek sovereign debt. We’re not a part of it but the elites are making sure we own part of it because the entire goal from the beginning was total integration. This is going to be berry berry messy. Learn to appreciate the sun rising in our new Third World.

  • LarryD

    Our central banking system didn’t prevent several state from getting into serious financial trouble, California being the example of one that is deep, deep in a hole.

    The Feds response to our current depression is to print money, we’re on what, the third round? The inflation index was redefined to exclude the most sensitive product classes, food and fuel, so the official inflation rate is understated.

  • DH

    The euro will be fine as long as Draghi holds the line and continues to ignore calls to debase it. And a debased currency is not what the PIIGS need. What they need is to default on their current debts, reduce government spending, face the resulting recession, and move on. Debased currency (whether euro or homegrown) will not fix their problems, but will only postpone and worsen the inevitable collapse. Better to face it now and get it over with.

  • richard40

    Since pretty much everybody in the Euro wants a devaluation and inflation, except for Germany, maybe the smartest thing is for Germany to leave the Euro. Then the rest can inflate away their debts as they please, while Germany is spared either hyperinflation, or future Euro bailouts. Of course Germany would suffer from no longer having the trading advantages of being in the Eurozone, but they would be spared either hyperinflation, or endless bailouts, both of which the Germans seem to fear far more than any loss of trade or disruption from leaving the Euro.

    By the way, I agree that it wouold be better for the weak Euro partners to not inflate, but just default, cut their budgets, and take their medicine, but it does not look to me like they have the political wisdom to do that. That is essentially what Iceland did do, and they seem to be better for it now.

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