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A clear, readable piece from Philip Stephens (again) on why fiscal rectitude will not prevent crises in the absence of current-account rebalancing:

Why the eurozone deal will fail - FT.com

If, however, southern European nations are no longer in the business of issuing unlimited government paper, what other assets might German investors acquire? Perhaps we'll see the titans of German industry building new factories in Spain, Portugal or Greece. But Germany's excess savings might be invested in southern European real estate or, even worse, newly-created pieces of paper uncannily similar to mortgage-backed securities.

(Google search link).

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Dec 13th, 2011 at 05:07:30 AM EST

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