April 11, 2011
— Ace More and more member nations need bailouts.
At some point, the wealthy can't cover for the poor.
This was always a ridiculous idea. As this article notes obliquely, some states in Europe have had a drunken-sailor attitude about debt -- just spend until you run out, declare bankruptcy, accept a few years of austerity, limp along again -- and some, notably inflation-sensitive Germany, are committed to fiscal solvency.
The Eurozone supposedly unites all these countries economically, but these are not in fact inferior states subject to federal authority as in America, were the government can bring all states on to the same basic page (for better or for worse-- lately, worse).
The states that like to borrow and spend can keep on doing so. It's just that the consequences of their imprudence wind up to be largely a problem of Germany, which then, of course, just encourages them to keep doing it.
Until Germany's tapped, too.
Very worst of all worlds scenario going on here.
Recently, I asked a well-placed minister what plans had been put in place in case the eurozone started to unravel. He just looked at me blankly: “That’s not going to happen. There is too much political will behind the euro for them to let it go.” In other words, the Cameron Government shares the same complacent analysis as the European political class: this is not a real problem, we’ll muddle through somehow, it’s all the fault of the speculators, etc etc.This is denial. The simple truth is that Greece, Ireland and Portugal are all bankrupt. Perhaps it is worth spelling out exactly what this means: however hard these countries try, and whatever austerities they impose, they will never, ever be able to pay off their debts.
In itself, this is not much of a problem – Greece and Portugal (though not Ireland) have gone bankrupt many times before, and always recovered. The tried and tested response is to default, then reschedule debts by reducing coupons (ie interest payments) and extending maturities, while allowing the national currency to depreciate so that the economy can once again become competitive.
Their membership of the eurozone, however, means that none of this can happen. There has, until recently, been an absolute determination in Frankfurt and Brussels that no European country should default. The reason for this is sobering: many leading European banks have massive exposure to the sovereign debt of these troubled countries.
Were Portugal or Greece to acknowledge formally that they are bankrupt, the big banks would have to come clean with investors about the true value of these loans. As a result, massive sums would have to be written off on the balance sheets of many of European bankingÂ’s most famous names, sending some spiralling towards bankruptcy. Even those that survived would have to cut back the scale of their operations sharply, thus curtailing lending to individuals and businesses. This, in turn, would damage business activity and send Europe yet deeper into recession.
Strapping yourself to drowning men is rarely a wise course to stay alive at sea.
Posted by: Ace at
02:38 PM
| Comments (77)
Post contains 526 words, total size 3 kb.
Strapping yourself to drowning men is rarely a wise course to stay alive at sea.
Throw them a Life-Vest Cinder Block.
Posted by: garrett at April 11, 2011 02:41 PM (CKF0y)
A society that squats over dribbling water to wet their poopers in lieu of bathing cannot last very long.
Posted by: Leftover Soothsayers at April 11, 2011 02:42 PM (/AACO)
Posted by: a wise man once said... at April 11, 2011 02:44 PM (CKF0y)
Posted by: willow at April 11, 2011 02:44 PM (h+qn8)
By the time the 'punt' ( not punt like in football ) was de-linked to the Sassenach Pound there was only a decade or so until the Euro, and that decade was Good Times
Now the tend has folded, but at least a decent house south of Dublin no longer costs a half-million
Posted by: SantaRosaStan at April 11, 2011 02:45 PM (UqKQV)
Posted by: willow at April 11, 2011 02:45 PM (h+qn8)
Posted by: Thulsa Doom at April 11, 2011 02:45 PM (IoUF1)
Posted by: SantaRosaStan at April 11, 2011 02:46 PM (UqKQV)
We'll raise the debt limit 1/2 to what Obama wants in trade for cutting funds for Planned Abortion, the EPA, PBS, and NPR.
The final deal: Debt limit gets raised 75% of what Obama wants and all that shit stays in the budget.
Yay?
Posted by: Leftover Soothsayers at April 11, 2011 02:46 PM (/AACO)
Posted by: Iblis at April 11, 2011 02:46 PM (9221z)
Posted by: joeindc44 at April 11, 2011 02:46 PM (QxSug)
Posted by: Oldsailor's poet at April 11, 2011 02:46 PM (cDRYC)
Posted by: Oldsailor's poet at April 11, 2011 02:47 PM (cDRYC)
Posted by: Ted Kennedy's Gristle Encased Head at April 11, 2011 02:47 PM (+lsX1)
And I'm the fucking ignorant Cave-Woman because I thought that the Eurozone was a supremely silly idea?
God bless the UK!
You certainly have your problems with the NHS but at least you hung on to your own currency,
Posted by: Deety Llanteria! at April 11, 2011 02:50 PM (Jb3+B)
Oldsailor , well now they'll have to agree on designs of footbaths in every country
Posted by: willow at April 11, 2011 02:50 PM (h+qn8)
Posted by: AnonymousDrivel at April 11, 2011 02:52 PM (swuwV)
Posted by: Oldsailor's poet at April 11, 2011 02:52 PM (cDRYC)
I was I Ireland last june, and a Brit who lives there told me Ireland was one of the most expensive places to live in the EU. I have no clue on that one, but the place was beautiful. Houses did seem to be pretty pricey compared to what you get in the US.
Posted by: Berserker at April 11, 2011 02:52 PM (gWHrG)
Strapping yourself to drowning men is rarely a wise course to stay alive at sea.
I remember reading about sunken lobster boats, where they find the bodies and discover cleat marks on the shoulders and heads of some of the victims.
seems that as the men are swimming in the ocean after the boat goes down, some men end up trying to stay above water by standing on the heads of less fortunate mates.
Sooner or later, Germany is going to decide it can't go down with the PIGS and will walk away from the Euro, and the French will be surprised.
Posted by: The Drill SGT at April 11, 2011 02:52 PM (pExnD)
Posted by: Steph at April 11, 2011 02:56 PM (AkdC5)
AIG gave the American tax payers money to Banks around the world, pay us BACK! ..... The idea that we are having to pay off the European banks with American ...
http://www.businessweekPosted by: willow at April 11, 2011 02:56 PM (h+qn8)
BTW: It will be the Frogs with cleat marks on their heads as the German banks try to stay afloat.
Posted by: The Drill SGT at April 11, 2011 02:57 PM (pExnD)
And yet, here we are, letting California stay in the union.
Posted by: huerfano at April 11, 2011 02:57 PM (6zFxS)
Posted by: Oldsailor's poet at April 11, 2011 02:57 PM (cDRYC)
Yeah, where is Slublog when you need him?
Prolly busy on the Twitter thing, I bet.
This blog needs a graphic for "The Tree of Woe".
Flaming Skulls?
Check.
Flaming Honey Badgers?
Yeah, we gots that too! (Sometimes)
What about The Tree of Woe?
Posted by: Deety at April 11, 2011 02:58 PM (Jb3+B)
Posted by: Berserker at April 11, 2011 06:52 PM (gWHrG)
House prices were Crazy by 2002, and got Much Worse until a few years ago. Dublin was worst, the counties south of Dublin ( especially Wicklow ) were nearly as bad, and the whole east was ridiculous.
Unless you liked 'Cromwell Country', it was hopeless trying to find a decently-priced house in Ireland until recently. But now it's worse, of course, because so many people are in Way over their heads
( Cromwell complained that the west country had "not a tree to hang a man from, enough water to drown him in, or enough dirt to bury him in" , or words to that Effect )
Posted by: SantaRosaStan at April 11, 2011 02:59 PM (UqKQV)
Posted by: Oldsailor's poet at April 11, 2011 06:57 PM (cDRYC)
Well, that's some good news! Go, baby girl, go!
Posted by: Steph at April 11, 2011 03:00 PM (AkdC5)
I understand chocolate rations will be increased from 14 to 12gm/person.
Posted by: AnonymousDrivel at April 11, 2011 03:01 PM (swuwV)
Posted by: joeindc44 at April 11, 2011 03:04 PM (QxSug)
Posted by: Deety Channles an international Monty at April 11, 2011 03:05 PM (Jb3+B)
Posted by: Guy Fawkes at April 11, 2011 06:55 PM (Z1jiu)
Royale with cheese--because of the metric system
Posted by: SantaRosaStan at April 11, 2011 03:07 PM (UqKQV)
girls with freckles........
Posted by: SantaRosaStan at April 11, 2011 03:11 PM (UqKQV)
Both borrowed tens of billions of dollars from the Fed on virtually a daily basis for months, well into 2009, Fed data revealed Thursday.
When Fed discount window lending peaked at around $110 billion on Oct. 29, 2008, Dexia and Depfa took the biggest loans that day. Dexia borrowed $26.5 billion, and Depfa borrowed $24.6 billion.
Posted by: willow at April 11, 2011 03:11 PM (h+qn8)
In her first prime time interview, Maya voices her opinion about the way Donald Trump has handled the Obama birthplace rant. “Well, I think it’s a shame,” she says. “And I think that my brother should definitely be president for a second term.”
“I think that it is time for people to put that to bed, to put it to rest completely.” She says there is a tremendous amount of proof Obama was born in Hawaii.
Sister? Where the hell has she been?
Posted by: Steph at April 11, 2011 03:11 PM (AkdC5)
Germany does not deserve an easy out on this. They were the ones who really pushed the EU idea...because there was a little somethin' somethin' for them out of the deal, or so they thought (and they have pushed their weight around quite a bit).
It has to be noted, the other countries such as Ireland, Italy cannot back out of their fiscal issues as they used to, be devaluing their currency and thus encouraging trade and tourism; the EU makes that so. And they cannot deal with their growing problem of immigrants on welfare (which drains their already weak economy) thanks to the EU (and by that, largely Germany and France).
So the Germans deserve every bit of f**king they get over this imho.
Posted by: unknown jane at April 11, 2011 03:13 PM (5/yRG)
Posted by: CAC at April 11, 2011 03:15 PM (Gr1V1)
Posted by: CAC at April 11, 2011 03:16 PM (Gr1V1)
Posted by: AnonymousDrivel at April 11, 2011 07:01 PM (swuwV)
i thought chocolate was a controlled substance now. Along with camomille and all those roots and things people who favor the "natural realm" shove down their throats on a daily basis? Oh and isn't it now illegal to grow food and give it away?
Posted by: curious at April 11, 2011 03:19 PM (k1rwm)
Posted by: Insolvent Zom-bee at April 11, 2011 03:22 PM (crDIp)
49 Germany is still very much controlled by socialists, and if they really wanted out of this, then they need to allow other EU member countries to get out of the EU, or at least allow other member countries some autonomy in the conduct of their affairs.
I don't wish them ill so much as I don't give them any sympathy -- they are not innocent victims here, and still aren't.
Posted by: unknown jane at April 11, 2011 03:23 PM (5/yRG)
Posted by: curious at April 11, 2011 03:26 PM (k1rwm)
Posted by: unknown jane at April 11, 2011 03:30 PM (5/yRG)
Posted by: unknown jane at April 11, 2011 03:34 PM (5/yRG)
Posted by: Oldsailor's poet at April 11, 2011 03:36 PM (cDRYC)
Posted by: unknown jane at April 11, 2011 03:38 PM (5/yRG)
In her first prime time interview, Maya voices her opinion about the way Donald Trump has handled the Obama birthplace rant. “Well, I think it’s a shame,” she says. “And I think that my brother should definitely be president for a second term.”
Sister? Where the hell has she been?No shit.
I can't believe that it takes this much fucking effort not to be a birther!
Posted by: Deety Channles an international Monty at April 11, 2011 03:40 PM (Jb3+B)
Posted by: unknown jane at April 11, 2011 07:38 PM (5/yRG)
Can't blame these countries from wanting these weapons. Germans make some good shit.
Posted by: Soona at April 11, 2011 03:42 PM (aD9cw)
60 I didn't say anything about "blame" -- what I am saying is that I have no tender feelings for poor wittle Germany.
I do not trust that country at all -- there is a difference between that and liking some of its citizens; my husband is German and some of my friends from back in the day are as well. But the country as a whole, I do not trust.
Posted by: unknown jane at April 11, 2011 03:51 PM (5/yRG)
I do not trust that country at all -- there is a difference between that and liking some of its citizens; my husband is German and some of my friends from back in the day are as well. But the country as a whole, I do not trust.
Posted by: unknown jane at April 11, 2011 07:51 PM (5/yRG)
I lived there for five years and I know what you're saying. They can sometimes have a very strange outlook on the rest of the world.
Posted by: Soona at April 11, 2011 04:01 PM (aD9cw)
A hell of a lot of DOOM today. Felt like a Monday all around.
Posted by: Canadian Infidel at April 11, 2011 04:01 PM (GKQDR)
________
Well, to hear a certain faction of the birthers tell it, she was born elsewhere, yet has a Hawaiian birth certificate, which was used as the basis for the factcheck.org forgery.
Posted by: Anachronda's tin foil hat is getting a bit worn in spots at April 11, 2011 04:12 PM (FzhYM)
63 it isn't strange at all, just not what a lot of Americans would like to think about
Posted by: unknown jane at April 11, 2011 04:17 PM (5/yRG)
Did she provide any of it?
Posted by: HeatherRadish at April 11, 2011 04:40 PM (0vDuM)
Posted by: Mr Diddy Wah Diddy at April 11, 2011 04:48 PM (BZEkR)
Posted by: toby928™ at April 11, 2011 04:55 PM (GTbGH)
And yet, here we are, letting California stay in the union.
Posted by: huerfano at April 11, 2011 06:57 PM (6zFxS)
Kahleefornia only gets back 78cents on the buck it sends to washington. If we could walk, we would be close to at least even. If we could kick out the illegals too we would be in the black for sure.
DiFi and that scrunt Boxer are just DemocRATick party hacks who enslave my state to the DC welfare machine.
Posted by: torabora at April 11, 2011 05:26 PM (ny5uA)
Well, hell, isn't that what we want our banks to do here in the US? Write down their damn loans ans such, go bankrupt, lose their shirts / pensions / asses, tie up the credit markets, and what not. That's called "building a firm foundation". After all that crap has come and gone, we'll have a financial system that has some faith and credence and that we can believe in. Stop pretending that the banking assets and portfolios are performing.
I'm sick and tired of bailing out their sorry asses every 10 years or so. 'Financial genius' is the new oxymoron.
Posted by: ss396 at April 11, 2011 06:36 PM (IfigT)
Posted by: Albert Speer at April 11, 2011 06:37 PM (kx2Hx)
People canÂ’t seem to figure out exactly what the Germans are up to. Some say they are still trying to find themselves 65 years after the last world war. I think itÂ’s something else Â…
When I was in college, we had this guy who would come around during the evening soliciting for answers to homework. He had the very hillbillie style so all my friends called him “Goober”. Goober would show up and ask about the worst problems on the homework, and of course, we would try to help the “poor fellow” out. Well, after a few months of this we found out that “Goober” was on the “dean’s list”.
I think the Germans are doing their imitation of “Goober” … let’s call it .. “Deiter”. Deiter always has problems, except when you check his balance sheet, he makes you look like a “poor cousin.” The US has pretty much picked up all the heavy lifting for Europe, but most especially for Deiter, who can’t do any heavy lifting or he might revert to some manifestation of the “Incredible Hulk.”
Well, tell me another fairy tale.
Posted by: Islamic Rage Boy at April 11, 2011 06:58 PM (tvs2p)
Shouldn't there be a kitty picture?
We don't mind you horning in on Monty's gig, but we got rules.
Posted by: RayJ at April 11, 2011 09:04 PM (rDhm0)
Couldn't happen to a nicer bunch of dicks. They spit at the US for decades as 'stupid', 'overly committed to capitalism', 'insensitive to the needs of others', etc., etc., etc. They then went whole hog socialist/Marxist redistributionist. Schaden Freude tastes so sweet.
Oh yeah, BTW, for those trolls out there that like to put some of the scandi countries up as 'success' stories of socialist BS... the few that are not currently bankrupt have 'free money' in the form of North Sea oil profits that have been socialized into the general funds of those countries. Without that cash flow they'd have been in the tank much earlier already.
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Posted by: premier jerseys at April 12, 2011 08:40 AM (8+Gwa)
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Doom in the evenin, now?
Posted by: Leftover Soothsayers at April 11, 2011 02:40 PM (5iMvt)