Of course if the rulers had more feudal powers, they'd find ways to strip more out of the rest of us... but luckily that's not the case for now...

A disturbing snippet from the summit was a statement by Angela Merkel, as reported by Frankfurter Allgemeine, in her argument against eurobonds. She said that the problem with eurobonds were low interest rates, which in the past had led to bubbles and other distortions. (One of the principal attractions for eurobonds is to reduce the extremely high borrowing costs of the periphery. It is one thing for Merkel to object to eurobonds on political and legal grounds, it is quite another to insists that interest rates in these countr[ies] should remain high.)

In other words, it's fine for Germany to fund itself at 0.07% at two years and it's also fine for other countries to pay several percent higher than that. The commercial banks enjoy the ZIRP and charge people and firms upwards of 5 percent for trade credit and higher for consumer credit.

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper

Of course if the rulers had more feudal powers, they'd find ways to strip more out of the rest of us... but luckily that's not the case for now...

Consider the following indisputable facts:

• A week ago the bankrupt Greek state borrowed  4.2 billion from Europe's bailout fund (the EFSF) and immediately passed it on to the European Central Bank (ECB) so as to redeem Greek government bonds that the ECB had previously purchased in a failed attempt to shore up their price. This new loan boosted Greece's debt substantially but netted the ECB a profit of around  840 million (courtesy of the 20% discount at which the ECB had purchased these bonds).
  
• During the same week, the fiscally stressed Spanish government was injecting large amounts of capital into Spanish banks. Simultaneously, to help finance the Spanish state, the ECB has provided large loans to Spanish banks (at 1% interest rate) which they then re-lent to their `saviour', i.e. the Spanish state, at interest rates often exceeding 6%.
  
• For the Greek and the Spanish governments to be `allowed' to borrow the monies involved in the operations described under 1 and 2 above, the ECB and the European Commission (plus, in Greece's case, the International Monetary Fund) demanded of them that they deflate their economies through savage spending cuts which will, with mathematical precision, reduce the national income from which loans, new and old, must be repaid.
  
• Average interest rates in the Eurozone (even if we exclude the three countries that have fallen out of the markets and have received `bailouts', and include Germany's crisis-induced ultra-low rates) are at least 1.5% higher than nations with a higher average degree of indebtedness, e.g. the UK.
  

The German Chancellor (correctly) argues that we cannot escape a debt trap by accumulating more debt. However, consider facts 1,2&4 above: they constitute a typical case of adding debt to debt; of insolvent states borrowing in order to pay a Central Bank that is lending to insolvent banks which, at once, receive capital from insolvent states and lend to them part of the money they themselves borrowed from the Central Bank!