I'm very busy today so I just have one quick note.
I think anyone who is 'worried about Europe" is making a strategic mistake. I think they are underestimating the lengths that Europe's leaders (if you have a better word for them I'm open) will go to in order to keep Frankenstein's EU monster alive.
Germans can get upset. They can hold elections. They can have protest marches and riots. It won't matter. The people running the EU will do whatever it takes... I mean that literally... they will do WHATEVER IT TAKES to keep the EU together. They don't care about cost. They don't care if it looks 'impossible' to the pedestrian accountants and financiers.
Spain, Portugal, Greece, Italy - none of it matters. They will pay any price. They view it as a existential battle. And the Fed will give them all the clandestine help they need. All of that debt duration will be transferred to the central banks by hook or by crook. There is no end game here, because they have no intention of ever letting the game end.
The rest is just ex-post justification and positioning.
7 comments:
Hi Tom, my name is ikaika, and I am the foremost authority on the EU and the Eurozone.
You are correct. They will do whatever it takes to keep the monster alive, however there are limits erroneously built into the system (for which we are all paying dearly).
Read : The Tragedy of the Euro - Philip Bagus, it's a free e-book.
After Sarkozy loses the election and Hollande replaces him, watch how Merkel takes a page from the book of Otto von Bismark...
The continuing crisis is the new normal.
The FRB will be like Igor to the ECB's Dr. Frankenstein.
They will add another 3 more nations to the Euro. All three will be no better than Greece or Portugal.
It is becoming Orwellian in its predictibility.
The very people that wanted a Eurozone will be the ones to destroy it under its own weight.
These are the socialists and they will lock step sweep parliamentary elections in backlash to austerity.
I'd be happy to expound, but I'm too busy instructing my paying customers on how to view the third phaase.
See Martin Wolf's article in FT: "Why the Eurozone may yet survive"
Let me clarify:
The EU itself is not in Jeopardy, however it is the Eurozone - the Common Currency that is simply overlooked as the common element - the virus - that is the contagion.
The EU will be around long after we are dead, however "Euros" need a serious evaluation.
Right, I've been unintentionally vague too.
The thing I think will endure is the EU governing body - that unelected gang in Brussels that are having so much fun imaging themselves as Charlemagne or Napolean. They'll save the Euro currency if they can, either in part or in whole. But if they need to hack off a limb to save the body they'll do it. But what what must happen (as far as they're concerned) is that they stay in charge.
The rulers stay, as do the subjects. the terms of their rule may change, but that's all.
I think that argues for a continuation of the status quo whatever the cost. They don't make decisions like you and I. they aren't goal oriented at all. They believe that good decisions are great if you can get them, but what you must avoid at all cost, is changing who it is that decides. Leave it to the EU governing body and 100% (200 or for that matter 10,000% if they can get away with it) of German GDP will be exported to member countries and to the devil with the "voters".
There will be as many 'bail outs' and 'extraordinary measures' as it takes to preserve the power structure. The rest is immaterial to them. If the law doesn't allow it, they will find a way around the law - just like they did last time.
>>imaging themselves as Charlemagne or Napolean<<
More like imagining they fight to prevent the rise of a new Charlmagne or Napoleon, not realizing what they have become. Now, if Germany truly were to retrace the path of Bismark, Without shrinking in shame for what followed, the impoverished socialists in France will rue far mare that the loss of a balance of power
hot off the presses!
EU PREPARES GREECE FOR RETURN OF DRACHMA
THE European Investment Bank was preparing for the break-up of the euro last night by allowing Greek firms to repay loans in its former currency, the drachma.
Greece’s Public Power Corporation is the first to agree to the currency clause in return for a £55million loan from the EIB.
The change in policy comes amid concerns that the struggling country may not be able to remain in the single currency for much longer.
The EIB will also include a revised currency measure in new loans with Ireland and Portugal. And it is planning to extend it gradually to all eurozone countries.
Well if it's in the papers then it must be true.
I'll mark the date. Maybe we can look back on this as when sanity returned to the continent, but as it stands I'm still waiting.
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