Three months that will test the Eurozone | 223 comments (223 topical, 0 editorial, 0 hidden)

But the thing is (4.00 / 3)

that European politicians have NOT taken any real political decisions. They're still hoping to avoid taking them; thus the markets will put them against the wall, but I still wouldn't bet that they won't do the right thing in the end.

What's the saying about doing the right thing, after having exhausted the alternatives?

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sun Apr 10th, 2011 at 04:35:35 PM EST
[ Parent ]

Re: But the thing is (4.00 / 2)

What's the saying about doing the right thing, after having exhausted the alternatives?

That was Churchill, and he was talking about us on the other side of the Pond.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Apr 10th, 2011 at 05:28:34 PM EST
[ Parent ]

Re: But the thing is (4.00 / 3)

But, does doing "the right thing" involve more than the bare minimum to keep in place a system that sends just enough benefits to France to keep her allied with Germany and the rest of the benefits to the export surplus northern countries, primarily Germany? Surely doing "the right thing" couldn't involve giving Greece, Portugal or Ireland a break, could it?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 10th, 2011 at 07:49:38 PM EST
[ Parent ]

Political decisions taken (4.00 / 6)

They have not taken any political decisions in the direction of what you consider the right thing. By the way, could you expand on specifically what you mean by "the right thing?".

But they have taken plenty of political decisions.

It is a political decision to create the EFSF. The size of its capital is also a political decision. The fact that tapping the EFSF is subject to "strict conditionalities" imposed by fellow EU finance ministers on the offending country is a political decision. The fact that these "strict conditionalities" amount to IMF'ing a fellow member state is a political decision. Crying bloody murder over ECB secondary market bond purchases is a political decision. So is the decision to bar the ESM (which will replace the EFSF after 2013) from buying sovereign debt in the secondary market (to complement the ECB's prohibition to buy it in the primary market). So is the decision to have "no bondholder bail-in before 2013". So is the ECB's threat to withhold liquidity from Irish banks. So is the lengthy negotiation of the parameters and timetable of banking stress tests (the very decision to do another round of banking stress tests is political).

Refer to my signature.

There is absolutely no indication that the current EU leadership has it in them to "do the right thing". In fact, in their public pronouncements on Portugal they're positively drooling over the prospect of imposing harsher austerity than rejected by the Portuguese parliament last month.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Mon Apr 11th, 2011 at 05:00:57 AM EST
[ Parent ]

Re: Political decisions taken (4.00 / 4)

The fact that the only way to satisfy the predators is to impose austerity - not that they'll care - is very much political.

The issue here is that the politics has become invisible and pretends to be inevitable.

The standard narratives are now built into the frame of the debate. No serious person can ever question them, and even unserious people can have difficulty seeing through them.

Economics is politics by other means

Or in more detail, economics has become a very literal form of Newspeak.

Instead of being simple, it pretends to be complicated. But it has the same deadening effect; dissenting concepts become unthinkable, challenging questions become unaskable, and humane values become morally hazardous.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Apr 11th, 2011 at 07:41:23 AM EST
[ Parent ]

that's exactly it (none / 1)

politicians pretend they are powerless and thus TINA. But it's not true. But they don't want to rock the boat (the yacht) with all their friends on it.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Tue Apr 12th, 2011 at 05:37:50 PM EST
[ Parent ]

Re: that's exactly it (none / 1)

So they are making political decisions all the time.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Apr 12th, 2011 at 07:15:45 PM EST
[ Parent ]

well, yes (none / 0)

but these are passive decisions, not active ones. I agree it's a political choice, but it's not exactly a "decision" in that it requires doing nothing, or close to that (or worse, most of the times these days: doing almost nothing and pretending you've taken big decisions - something which decredibilises political decisions in making it look like "big decisions" don't change a thing)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Apr 13th, 2011 at 05:45:25 AM EST
[ Parent ]

Re: well, yes (none / 0)

Once again "the Euro can do no wrong", only this time it's "they just fail to do the right thing, or anything for that matter" version.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Apr 13th, 2011 at 05:53:43 AM EST
[ Parent ]

Re: well, yes (4.00 / 6)

An optimist will note that the Euro could be saved at any time by sound policy.

A pessimist will note that nobody in a position of power to help implement sound policy gives any indication of being able to even think in terms that makes it possible to talk about what a sound policy is.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Apr 13th, 2011 at 01:52:42 PM EST
[ Parent ]

Re: well, yes (4.00 / 4)

That is why the whole spectacle is like watching a bad horror movie. Everyone is inexplicably paralyzed while being engulfed by their doom. But in this case, some of us can see how the whole "crisis" could be resolved, but that would require dialing back the looting, or wealth transfer, if you prefer, by the financial elites and doing it by political means.

The elites, collectively, cannot bring themselves to moderate their greed even in the interests of prolonging their highly successful game, and all others have not been able to bring themselves to stop the elites or even to significantly oppose them. So we roll onward towards the cliff that lies ahead. The question that remains is the extent to which those elites and those who serve them understand this and are just caught up "riding the tiger", are complete, unquestioning believers in the propaganda that has been promulgated on their behalf or simply don't care about the consequences and are convinced that the consequences will be for others.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 14th, 2011 at 07:43:56 PM EST
[ Parent ]

Re: Political decisions taken (none / 1)

Doing the right thing means buying as much spanish debt as needed to fix its rate. Better without withdrawing liquidity from the market.

But this means Spain will have to do whatever Germany decides it has to do. Otherwise Spain will follow Portugal fate and the ECB will stop buying bonds.

And here you have a poker game if Germany and Spain knew what they are doing.. the problem is that the crazy economic sect of uber-austerity is in the middle of the game. They may want Spain to receive a lesson, and more pain for the South and all that stuff. They could destroy the euro in theprocess.

So, the austeristas and gold-stadnard lovers will have to break one of their dremas. A pure gold-standard, since the ECB has to buy spanish debt... or just the end of the euro-gold because noone will pay the spanish bail-out.

Two years on, the only last hope of Spain is still that it is too big to fail and the ECB must fix the spanish bond rate or the euro can go in flames...

The other option is that they try to do a Portugal to Spain... more pain for Spain.. and a bridge loan.. and then moves to the next country.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Apr 11th, 2011 at 09:09:30 AM EST
[ Parent ]

Re: But the thing is (4.00 / 3)

I still wouldn't bet that they won't do the right thing in the end.

I wouldn't bet that they will be able to do what is necessary and sufficient once they have reluctantly come to the conclusion that they must. Dither around long enough and the opportunity is likely to pass.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 10:58:36 AM EST
[ Parent ]

Re: But the thing is (4.00 / 3)

In addition, a number of countries which have already been IMF'd by the EU would rightly feel aggrieved by the preferential treatment given to Spain. This is not limited to Portugal, Ireland or Greece, but includes Hungary, Estonia...

Spain, in fact, joined forces with the other big European economies on an earlier occasion:

The surge in Irish bond prices on Friday came after the finance ministers of Europe's five largest economies issued a statement reiterating that any plans to force private investors to bear the burden of future sovereign bail-outs would not affect anybody currently holding eurozone bonds.
"We are clear that this does not apply to any outstanding debt and any programme under current instruments," the British, French, German, Italian and Spanish finance ministers said in the statement released at the G20 summit in Seoul.

which I criticised harshly:

Zapatero, the last best hope of Social Democracy in Europe [sic], joins forces with the Conservative-Neoliberal governments of Germany, France, Britain and Italy in a futile attempt to protect his own bond spreads, only to find a few weeks/months from now that the other 4 larger economies hang him out to dry...

Chickens coming to Spain to roost in 3, 2, 1...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Mon Apr 11th, 2011 at 11:28:05 AM EST
[ Parent ]

Three months that will test the Eurozone | 223 comments (223 topical, 0 editorial, 0 hidden)

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