I'm glad it's not just me who's noticed the insanity of all this, as summarised in a recent Evening Standard
European sovereigns [governments] and banks need to find €1.9 trillion to refinance maturing debt in 2012. Italy alone requires €113 billion in the first quarter and around €300 billion over the full year.
Given that banks and investors have been steadily reducing their exposures to European countries and banks, the ability to finance this debt is uncertain. The bailout fund and the International Monetary Fund, with around €200 billion to €250 billion each, cannot absorb this issuance.
The only solution - "Sarko-nomics" - is for European banks to purchase the sovereign debt, which is then pledged as collateral to borrow unlimited funds from the ECB or national central banks. This perpetuates the circular flow of funds with governments supporting banks that are in turn supposed to bail out the government.
Meh
1 hour ago
7 comments:
"Sarko-nomics" could work if it was a temporary strategy to allow time for radical economic structural reform that allowed the return of free market capitalism and competitiveness. However "Sarko-nomics" does not include changing economic models so that real growth becomes possible so all it will achieve is containment until such time as the crisis re-emerges in a more virulent form.
Antisthenes - quite, but as you say it won't, so doing it in the first place is stupid...
Anti, in the very short term, I can sort of see a possible marginal advantage in governments helping banks, or of banks helpding governments. But the idea that they can prop each other up like two sheaves of straw is madness (as Lola suggests).
"all it will achieve is containment until such time as the crisis re-emerges in a more virulent form."
Exactly :-(
"until such time as the crisis re-emerges in a more virulent form"
But that might be after the next presidential/general/euro elections...
In any case, a week is a long time in politics and a problem deferred is a problem solved, doncherknow?
This is what the whole w**kiness is about, all the throwing up of the hands into the air and "whatever can we do"?
It's been planned for, it's a known known. The whole nature of the debt is artificial and while accountants and economists rabbit on about this debt or that debt, those who see the purely political side say that the figures are irrelevant.
What this is about is the EU, WB and IMF, not to mention the BIS supported CBs owning nations. Once that's done, there is no way for anyone rabidly hanging on to this sort of fiscal responsibility, as they see it, to do as they're told.
In other words, they've done a number on us. The socialists are all for the government just taking it all on, a la USSR, while the anti-socialists are on about this debt figure, which is completely artificial and was instituted to blunt the responsible and hand control to foreign bodies.
The answer is total fiscal irresponsibility, a la Yeltsin. The wise and professional will look to the heavens at that naivety and yet it worked in Russia. It's just that we, as [former] good money managers, see irresponsibility as anathema.
But hang on a minute - who's this debt to? To the very people who have set this up. Call their bluff, start all over again with a nationally based bank and when the EU and IMF threaten to "foreclose" and threaten that no one will trade with the UK again, we say Arkell v Pressdram.
Of course countries will trade with us. We're not taking your BS any more. Then we begin with a manufacturing/production economy again, where people buy and sell tangible assets.
You can call this naive but look where it's headed - either to a bizarre situation where we, the taxpayers, are funding the EU to borrow to bail us out.
F*** 'em.
B, I don't think that Sarko seriously expects to win the next election, that is not his concern. What he cares about is keeping the banks happy so that once he is booted out, he ends up with a cozy sinecure with WB or IMF, or maybe gets a 'consultancy' with a bank, like Mandy, Blair, Brown et al.
JH: "What this is about is the EU, WB and IMF, not to mention the BIS supported CBs owning nations... In other words, they've done a number on us."
Yes, exactly. To paraphrase Sherlock Holmes, once you have ruled out insanity the only answer, however improbable, is endemic corruption, fraud and theft.
I don't blame fraud. Exponential debt is the politically simplest way to cope with the damage to comparative advantage/the economy from taxes on incomes.
AC1
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