How to kite $60 Trillion in Euro debt that cannot be repaid. Clearly the
government must capture the private banks and force them to purchase the
worthless sovereign bonds. Meanwhile Euros are fleeing Europe before "capital
controls" confiscate savings accounts. .... The top finance officials from
Germany and the United States urged co-operation in the fight against the
eurozone debt crisis after a meeting on Monday that fuelled hopes
Europe is preparing decisive action. In a joint statement, US
Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang
Schaeuble expressed "confidence" the eurozone could carry out the reforms needed
to escape the two and a half year debt crisis. They emphasized
"the need for ongoing international cooperation and coordination to achieve
sustainable public finances, reduce global macroeconomic imbalances and restore
growth," said the statement, issued after the meeting on the northern German
island of Sylt.
I just absolutely HATE having these two unelected bankers, who think they
are so much smarter than anyone else, determining the fate of the world. They
were in large part responsible for the collapse of the world's economies and now
our governments are giving them a free hand to get us out of it. Problem is,
their solutions always mean that taxpayers get to pay, pay, pay and their banker
buddies walk away with a bigger bonus. Is there nothing the citizens of the
world can do to rid themselves of these vampires? Has every government on planet
earth sold out to them? - - - YES, YES and YES !!!
2 comments:
While German political leaders now declare their allegiance to the eurozone, opinion polls in Germany show that public support for the euro is very weak. As the risks accumulate, it is not inconceivable that Germany might conclude that, despite the potential impact on its exchange rate, it would be better off returning to the Deutsche Mark.
For all of these reasons, the ECB's direct purchase of high-yield sovereign bonds to limit their interest rates would be a mistake. It would also be a mistake to do this indirectly by another €1tn long-term refinancing operation aimed at encouraging commercial banks to buy those bonds. And it would be a mistake to allow the ESM to have a banking license so that it can borrow from the ECB, greatly increasing its purchase of peripheral countries' bonds.
Individual governments should take the tough political steps needed to reduce the risk of a eurozone breakup, which would have very substantial financial costs for all – and not only its members. Unfortunately, ECB officials' recent statements may have reduced the pressure on governments to do those things, and, by reversing the decline of the euro's value, may have blocked the market response that is needed to shrink current-account imbalances and boost GDP in the eurozone. Sooner or later, the ECB will have to clarify the limits of its policy.
Recent statements by European Central Bank president Mario Draghi and Bank governor Ewald Nowotny have reopened the debate about the desirable limits to ECB policy. The issue is not just the ECB's legal authority under the Maastricht Treaty, but, more importantly, the appropriateness of alternative measures.
Nowotny, the president of the National Bank of Austria, suggested that the European Stability Mechanism (ESM) might (if the German constitutional court allows it to come into existence) be given a banking license, which would allow it to borrow from the ECB and greatly expand its ability to purchase eurozone sovereign bonds. Draghi later declared that the ECB can and will do whatever is necessary to prevent high sovereign-risk premia from "hampering the functioning of monetary policy".
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