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The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:49:04 AM EST
Russian opposition leader detained after fresh protests | Europe | Deutsche Welle | 18.12.2011

About 1,500 protesters took to the streets in Moscow and other Russian cities on Saturday to demonstrate against the disputed December 4 parliamentary election.

The turnout of the protests was far below that of the rallies one week ago, when more than 50,000 demonstrated in Moscow, St. Petersburg and elsewhere.

Saturday's protests in Moscow had been organized by the center-left Yabloko party, which failed to win any seats in the upcoming parliament, receiving only 3.3 percent in the vote.

Prime Minister Vladimir Putin's United Russia party won an absolute majority in the Duma but lost the two-thirds majority it held in the previous term.

Critics say the party actually did far worse and only maintained the slimmest of majorities through ballot stuffing.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:56:54 AM EST
[ Parent ]
I can't believe that Putin is so stupid to detain opposition leader of one minor party after protests are going down in numbers...So bloody stupid.
Milosevic did same at the beginning (with a leader of one of biggest opposition party) until he learned that it is much better to have same leader in his government, ha-ha.


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Sun Dec 18th, 2011 at 07:58:15 PM EST
[ Parent ]
I gather that autocrats don't really feel fulfilled unless they get to rub their opposition's face in the dirt. I guess it's just part of the syndrome.
by Andhakari on Mon Dec 19th, 2011 at 02:12:50 AM EST
[ Parent ]
German president faces fierce criticism over private loan scandal | Germany | Deutsche Welle | 18.12.2011

President Christian Wulff faced increasingly ferocious criticism on Sunday after he admitted to having failed to disclose a private home loan he received while serving as the state premier of the northern German state of Lower Saxony.

Thomas Oppermann, the parliamentary head of the opposition center-left Social Democratic Party (SPD), told Germany's Bild am Sonntag newspaper that in order to "restore his credibility" Wulff must fully explain the 2008 loan he received from the wife of wealthy German businessman Egon Geerkens.

SPD Secretary General Andrea Nahles went so far as to indirectly call for the president to step down. In an interview with German public television she said Wulff must offer a quick and clear explanation. "If he can't do that, he must reconsider whether he can continue to set and example for Germany," she said.

The Free Democratic Party MP Erwin Lotter was more explicit in his demands. "The immediate resignation is a requirement of integrity and responsibility," he told German news agency dpa.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:57:10 AM EST
[ Parent ]
Nick Clegg mocks Conservatives over '1950s view' of British family | Politics | The Observer

Nick Clegg will open a new front in his criticism of David Cameron on Monday by mocking his "1950s view" of the traditional British family, in which the "suit-wearing dad" is the breadwinner and the "aproned" mother the homemaker. The deputy prime minister, in a speech to the Demos thinktank, will also take issue with Cameron's defining idea of a "big society" based upon the institutions of marriage, the family, the church and voluntary organisations.

After a week dominated by his rift with Cameron over Europe, Clegg's latest attempt to assert his political philosophy and set out his differences with the prime minister will infuriate Tory MPs - many of whom privately doubt whether the Tory-Lib Dem coalition can last a full five-year term.

The intervention comes after Cameron, in a speech on Saturday, stressed the importance of religious faith as a force for good in society, saying it provided people with "a moral code" upon which to run their lives.

Stressing the Lib Dems' "progressive" credentials, Clegg will make clear that his party would never support Tory plans for tax breaks for married couples - an idea he said was the product of a party that failed to notice social changes until well after they had happened. "The institutions of our society are constantly evolving," Clegg will say. "Just look at the way the roles of men and women, and attitudes to marriage and divorce, have changed over the last century. We should not take a particular version of the family institution, such as the 1950s model of the suit-wearing, bread-winning dad and aproned, homemaking mother, and try to preserve it in aspic."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:57:18 AM EST
[ Parent ]
Hi. I'm Nick Clegg. I'll screw you over and say whatever I need to in order to stay in power and promote myself. I'm a politician and you're stupid.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sun Dec 18th, 2011 at 06:40:35 PM EST
[ Parent ]
Well Cameron obviously slept over last 40 years...His vision of the family is not going to happen (again). Church is totally hopeless in spreading the message, so do not count on it.
Trouble is that somehow people need to learn (again) how to take responsibilities of having a family (this has been lost lately). That's why we have 32% of single parents in conservative Switzerland, and who knows what percentage in those "progressive" countries. I do not mind people doing whatever they want with their lives if it's not about children.
So in a way I am all for less tax for married people (and even less for those with children). Because people only "understand" two things: 1. incentives 2. Force.
Sorry but I am a little conservative when it comes to children because I see what is happening around and I don't like it a bit.
All tho Cameron will need to make those less taxes dependant of the time those marriages will last. Otherwise people will get married just to avoid tax, ha-ha.
Seriously, I am afraid it's not going to work anyhow. Level of selfishness in our societies reached epic proportions...


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Sun Dec 18th, 2011 at 10:21:00 PM EST
[ Parent ]
vbo:
Trouble is that somehow people need to learn (again) how to take responsibilities of having a family (this has been lost lately).

citation_needed

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Mon Dec 19th, 2011 at 05:09:05 AM EST
[ Parent ]
Sounds like Clegg just realized that he is in a coalition with the Conservatives.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Dec 18th, 2011 at 11:41:37 PM EST
[ Parent ]
He sounds like someone who just woke up in a strange bed with someone of indeterminate gender - and not even remotely attractive whichever way one may be inclined to swing.
by Andhakari on Mon Dec 19th, 2011 at 02:22:17 AM EST
[ Parent ]
That pretty much means he's been dead drunk for the last few years.
by tjbuff (timhess@adelphia.net) on Mon Dec 19th, 2011 at 10:38:47 AM EST
[ Parent ]
What it is not is an intellectual vision of the future. Having marched out of europe, he's both changing the subject while he's still ahead and also rallying the troops.

And he's chosen to do it by invoking the British English equivalent of Mom and Apple pie. They are the sort of soft-focus "nice" things that appeal to the atavistic heart of Daily Mail readers, right next to that bit that warms to the idea of shooting strikers in front of their families.

As for Clegg; who cares ? He can bitch about this and that if he wants, but there's no policy here, so there's nothing to vote against. His problem is that when there is a vote that goes against his professed conscience or crosses a LibDem line in the sand, he loyally votes with the tories. Every time. He is merely another unprincipled enabler of Conservative policy.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 19th, 2011 at 03:23:09 AM EST
[ Parent ]
Riots break out in Kazakhstan amid reports of more dead | World | Deutsche Welle | 18.12.2011

Protests in Kazakhstan's Mangistau province spread to the region's capital of Aktau on Sunday morning, with about 500 angry protesters gathering near the main square to face a large force of riot police. The fresh demonstrations come a day after rioters blocked a passenger train and vandalized a village before police reportedly opened fire, killing one person.

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  UzenMunaiGas' headquarters was one of several buildings set alight

 

The violence began in the western city of Zhanaozen on Friday when sacked oil workers and sympathetic citizens stormed a stage set up in the town's main square to mark the 20th anniversary of Kazakhstan's independence. They later set fire to the city hall and the headquarters of the local oil company. Workers in Zhanaozen and other cities in Mangistau had been striking for months for higher wages.

 

A 20-day state of emergency was declared on Saturday and the town has been virtually cut off from communication, with phones disconnected, radio equipment prohibited and access to and from the city restricted.

 

"We want them to take away the troops," one of Sunday's protesters told news agency Reuters. The welder had been fired from the oil company Karazhanbasmunai (KBM) after working there for 20 years. "They killed local people."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:57:35 AM EST
[ Parent ]
Russian oil rig capsizes with 67 onboard | World | Deutsche Welle | 18.12.2011

At least four people were dead and dozens were missing after an oil drilling rig capsized and sank in the Sea of Okhotsk off Russia's east coast on Sunday. A regional ministry spokesman said at least four people were confirmed killed while 14 had been rescued.

The Russian Emergencies Ministry (EMERCOM) said in a statement that the rig had turned over as it was being towed by a tugboat and ice breaker from the Kamchatka peninsula towards Sakhalin Island amid high winds and temperatures of minus 17 degrees Celsius (1.4 degrees Fahrenheit).

"[The] main suspected reason for the accident was a violation of safety regulations by transporting the platform with no account for weather conditions, as there was a strong storm in the area," a Russian investigative committee said in a statement.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:57:46 AM EST
[ Parent ]
But wind turbines kill birds!

Wind power
by Jerome a Paris (etg@eurotrib.com) on Sun Dec 18th, 2011 at 04:36:06 PM EST
[ Parent ]
Sure, but the talking heads are all relics of the Cold War era.  "Birds > Russians."

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Dec 18th, 2011 at 08:52:34 PM EST
[ Parent ]
Um, did you mean Russians > birds?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Dec 18th, 2011 at 11:43:21 PM EST
[ Parent ]
I think he meant birds are more important than russians.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 19th, 2011 at 03:24:29 AM EST
[ Parent ]
Yes.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Dec 19th, 2011 at 06:15:13 AM EST
[ Parent ]
I took the relationship to be one of concern for damage potential.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 08:39:43 AM EST
[ Parent ]
EU-Ukraine talks overshadowed by Tymoshenko trial | Europe | Deutsche Welle | 18.12.2011

Monday's EU-Ukraine summit looks set to be derailed by the EU's dismay at the treatment of opposition leader Yulia Tymoshenko. The former prime minister was convicted of abuse of power in a trial that was condemned internationally as politically motivated.

The trial removed President Viktor Yanukovych's main rival off the political stage.

Monday's summit marks the culmination of four years of negotiations and Yanukovych insists he expects the talks to be a success.

"We are geared up for the signing of the agreement for an association with the European Union that recognizes Ukraine's right to become a full-fledged member of the European community," he said on Friday.

Yet it would be something close to a miracle if the summit did indeed make any significant progress towards an association agreement, intended as a broad framework encompassing a free trade deal with the EU.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 12:03:06 PM EST
[ Parent ]
UK strikes back at French criticism - FT.com

Britain has described as "simply unacceptable" attacks on the UK economy by French ministers and central bankers, as tensions over the eurozone crisis brought relations between the two countries to a new low.

Amid fears in Paris that France could lose its triple A sovereign debt rating, François Baroin, French finance minister, on Friday said: "The economic situation in Britain today is very worrying, and you'd rather be French than British in economic terms."

His comments follow remarks by Christian Noyer, head of the Bank of France, who said credit rating agencies should be more worried about Britain, which had "bigger deficits, more debt, higher inflation and less growth than us and where credit is shrinking".

Initially the attacks were shrugged off by Downing Street. British officials saw the comments as an attempt to deflect attention from the possible downgrade and from new figures showing France had slipped into recession during the fourth quarter.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 12:03:32 PM EST
[ Parent ]
Eurointelligence Daily Briefing: Fitch has given up on the eurozone
Rating agency puts six countries, including Italy and Spain, on a negative watch; also warned about a French downgrade in two years;concludes that a comprehensive solution to the eurozone debt crisis is politically and technically beyond reach; Jean Quatremer says the downgrade threat for Belgium is unfair
Because Belgium isn't France isn't Italy isn't Spain isn't Portugal isn't Ireland isn't Greece, as is evident to anyone who lives in Brussels.
Vittorio Grilli says the EU has to do more to solve the crisis - prioritising to reverse the liquidity crunch, and strengthen the EFSF/ESM; Mario Draghi warns about the costs of a eurozone breakup; the troika is about to tell the Greek government to make further savings of €2bn; the Portuguese opposition rejects a constitutional change, but is willing to support a "golden rule" in secondary legislation; Germany's president Christian Wulff is engulfed in a property loan scandal that might cost him his job; Jens Weidmann says ECB would not increase bond purchases even if the crisis got worse; he also said eurosystem would not refinance EFSF/ESM even if they did have a banking licence
I'd like to know the legal grounds for that
Jürgen Stark says ECB bond purchases were an important reason for his decision to resign; Wolfgang Münchau says France really is in a worse shape than the UK; Ronald McKinnon, meanwhile, writes that the eurozone needs a James Hamilton.


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 04:05:58 AM EST
[ Parent ]
Jürgen Stark hints at real reasons for his resignation

So far Jürgen Stark always said that his resignation from the ECB board by the end of this year was due to ,,personcal reasons". In an interview with Wirtschaftswoche Stark added: ,,There is a big topic that is the reason for it (the resignation): I am dissatisfied how the currency union has evolved." Just as Weidmann he insisted that ECB's bond purchasing program was limited and that it was impossible to extend the central bank's balance sheet indefinitely. Stark also accused Greece - even under the leadership of his former ECB colleague Lucas Papademos - not to do what is necessary to get the country out of the mess. ,,Greece has currently chosen an option that is too easy by saying the country suffers under a systemic crisis in Europe. It is not acceptable to hand over the responsibility to other people if one has not done one's homework."



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 05:07:20 AM EST
[ Parent ]
The interview is here: Jürgen Stark: ,,Das kann nicht Aufgabe einer Zentralbank sein"
Typisch für diese Krise ist, dass immer wieder neue Nachrichten die Märkte aufschrecken. Mal sind es die Ratingagenturen, mal streiten sich die Regierungen untereinander oder mit der EU, dann schlagen der IWF oder die EZB Alarm. Ist dieses Informationschaos hilfreich?

Das, was Sie Informationschaos nennen, ist die Folge von politischen Entscheidungen, die nicht an dem Gesamtproblem ausgerichtet sind, sondern immer nur Teilprobleme in den Blick nehmen. Daraus würde ich aber der Politik keinen Vorwurf machen. Die Lösung dieser Krise lässt sich in keinem Lehrbuch nachschlagen, und all die klugen Äußerungen aus dem akademischen Bereich widersprechen sich sowohl in der Analyse als auch in den Rezepten. Das bringt die Regierungen immer wieder in fast ausweglose Situationen - dennoch müssen sie Entscheidungen treffen.

Fallen die Entscheidungen unter dem Druck der Märkte zu vorschnell?

Die Politik hat es nicht leicht. Es gibt kontroverse Lösungsansätze aufgrund unterschiedlicher Beratungslage. Daraus resultieren dann auch Konflikte innerhalb der Europäischen Union. Und es kommt hinzu: Die Entscheidungen der Regierungen bedürfen der demokratischen Legitimation. Die Regierungen müssen sich gegenüber ihren Parlamenten rechtfertigen, und die Parlamente müssen dies den Wählern gegenüber tun.

...

Hätte die EZB nicht früher korrigierend eingreifen müssen, um die Schieflage innerhalb der Euro-Zone zu verhindern?

Die EZB hat ihren Auftrag, die Preisstabilität zu gewährleisten, voll erfüllt. Auf die unterschiedliche Entwicklung der Lohnstückkosten in der Euro-Zone haben wir schon 2005 sehr deutlich hingewiesen. Die Politik hat das damals nicht als akutes Problem angesehen.

Witschaftswoche: Stark: "This can not be the task of a central bank"
It is typical of this crisis that the markets are always scared of breaking news, one time it's the rating agencies, another the governments argue among themselves or with the EU, yet another the IMF or the ECB sound the alarm alarm. Is this information chaos helpful?

What you call information chaos is the consequence of political decisions that are not aimed at the overall problem, but only take a piecemeal view of it. From this I would, however, not blame the politicians. The solution to this crisis is not to be found in any textbook, and all the wise comments from the academic sector are contradictory, both in the analysis as well as in the recipes. This keeps putting the governments in almost hopeless situations - but they have to make decisions.

Decisions are made under pressure from the markets prematurely?

It is not easy in politics. There are controversial proposals for solutions because of the diverse advice. This will also result in conflicts within the European Union. And on top of that, the decisions of governments require democratic legitimacy. The governments have to justify them to their parliaments, and parliaments must do this to the electorate.

...

Shouldn't the ECB have taken earlier corrective action to prevent imbalances in the euro zone?

The ECB has fully met its mandate to maintain price stability. On the divergent evolution of unit labor costs in the euro zone, we pointed it out very clearly in 2005. Politicians have not regarded them as as an acute problem then.

So, the only imbalance worth mentioning in the Eurozone was "unit labour costs" (i.e., "competitiveness) not the structural trade imbalances (which are not exactly solved by slashing wages).

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 05:25:11 AM EST
[ Parent ]
Daniel Gros: Can Italy survive the financial storm? (VoxEU)
In an ideal world it is clearly not the task of a central bank to finance regional current-account imbalances.  But it would still be preferable for the ECB to provide the Italian banking system with continuing access to its normal monetary policy operations to the tune of €50 billion annually, rather than buying hundreds of billions worth of government debt.  (See my CEPS commentary on why the ECB has no choice but to effectively become the `central counterparty' given that the Eurozone is not a fiscal union.)
Get that, Herr Stark? We don't live in an ideal world.

Anyway, Gros' solution is this:

The distribution of tasks should be simple:
  • Italian households should finance their own government by buying its debt, and
  • The ECB should prevent a collapse of the Italian banking system.
A first, key element of survival is thus that the new high-cost debt should be sold mostly to Italians.  In this way the higher cost of debt service will not be a burden on the country, but just a redistribution of income between savers and taxpayers.
If you can't tax savings through inflation, try to lure them into buying your debt.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 05:59:32 AM EST
[ Parent ]
just a redistribution of income between savers and taxpayers.

And that cannot possibly lead to a collapse in aggregate demand, now can it? Because that would mean people saving without specific plans to spend later. And that is basically like saying that people can't predict the future.
Must be a miserable world where you don't even know next weeks weather. Probably round too.

by generic on Mon Dec 19th, 2011 at 07:33:11 AM EST
[ Parent ]
Not exactly. What Daniel Gros is suggesting is that the existin Italian savings should be channelled through Italian sovereign debt.

No word of the fact that Germany has an excess of savings over investment, and a government which intends to reduce the amount of debt it issues, so that German savings must be recycled into foreign assets. Gros is suggesting Italian debt should be held by domestic investors in a proportion of about 3/4, rather than the current 1/2. But then you'd have to prevent German and Italian savers from investing freely in each other's debt markets (Italians cannot buy "safe" German bonds, Germans cannot buy "high-yield" Italian bonds). That is, curtail the free movement of capital in the single currency area.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 07:47:42 AM EST
[ Parent ]
Irish Examiner: Minister: No EU `yes' vote without debt deal
Junior Finance Minister Brian Hayes insisted the country would need a "significant reduction" in its debt burden before voters would endorse the new EU fiscal union in any poll.

"The idea that we could have a referendum without that agreement, on a substantial rearranging of our debt, wouldn't fly," he said.

"We would have to have that in place before we put the question, and that's beginning to be understood at an EU level, which puts us in a stronger position.

Talking up one's position like that might not be wise so early in the game. And back in 2008 when Ireland issued their blanket guarantee the first thing they did was go on British radio to advertise that their banks were safer for depositors. Also not a wise move.

Meantime: @economistmeg

MT @djfxtrader: Pact Will Enter Into Force When 9 Of 17 Euro Zone Countries OK It - EU Officials Tell DJ-WSJ >> Who agreed to this??



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 05:53:57 AM EST
[ Parent ]
More wheels coming off the European Central Cart: The ECB's Risky Business by Daniel Gros
Now that the "southern" eurozone governments' solvency no longer seems assured, distrust has grown along national lines. German banks continue to lend to each other (and to other banks in northern Europe), but they are no longer willing to lend to Italian, Spanish, or other banks in southern Europe.

A sudden withdrawal of interbank funding has the same consequences as a bank run. A bank that suddenly has to repay its interbank debt must cut credit to its own customers or sell off other assets, leading to large losses. This is precisely what happened when the interbank market froze after Lehman Brothers collapsed in 2008.

When the cross-border interbank market stopped working this summer, a similar economic collapse was avoided only because the ECB, without much fanfare, became the eurozone's central clearing house. German and other northern European banks that no longer trust their southern counterparts parked their funds at the ECB's deposit facility, whereas southern European banks used the ECB's lending facilities to make up for the loss of private interbank funding.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 06:01:29 AM EST
[ Parent ]
European Bank Recapitalization


The €115 billion would not be so bad were not the expectations that the banks should either recapitalize themselves or that insolvent sovereigns should recapitalize their own banks. But that is the expectation, so I guess we will just see the EZ crash and burn? Were these banks recapitalized how long would it be before they were right back where they are now?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 08:53:37 AM EST
[ Parent ]
If you can believe this, the incoming Spanish government is considering a Bad Bank solution not unlike NAMA whereby the Spanish state would buy over 20 billion in bad assets (chiefly, undeveloped land) while at the same time vowing to reduce deficits and debt to keep Merkel happy.

It appears that the experience of NAMA is one of the main reasons why the Bank of Spain opposes the measure, and even private banks don't like the idea.

On the other hand, a number of entities which have been rescued, merged, restructured... in the past 3 years keep coming up with bigger and bigger accounting holes. The latest one was up to 17 billion in losses at Caja de Ahorros del Mediterráneo, where the initial estimate was 5 billion...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:01:51 AM EST
[ Parent ]
I can't remember if NAMA ended up on the official deficit or not? If they construct the SPV properly and browbeat the statistical agencies properly then they can take on all that debt without it being part of the deficit. Cunning, eh?
by Colman (colman at eurotrib.com) on Mon Dec 19th, 2011 at 09:18:04 AM EST
[ Parent ]
This is 2011, not 2008. After the EFSF it's become clear nobody in their rightmind is going to touch an off-balance-sheet government "vehicle" with a 10-foot pole.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:33:50 AM EST
[ Parent ]
There are people involved who are in their right mind? Can we put them in charge?
by Colman (colman at eurotrib.com) on Mon Dec 19th, 2011 at 09:51:43 AM EST
[ Parent ]
Maybe. No.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:55:22 AM EST
[ Parent ]
Not a bad comment from Sky News: Super Mario Can't Save The Euro On His Own
If it were to copy the Bank of England, it would be duty-bound to buy up government debt from all the euro states in proportional quantities. As the think tank Open Europe has argued today, this would mean that "even a €500bn bout of QE - as some have called for - would see only €90bn flow towards Italy, due to the need to spread QE evenly across the eurozone. This would not make a significant dent in Italy's €1.9 trillion of sovereign debt."

This, in essence, is why it all comes back to politics in the end. What is needed to save the euro is a transfer of wealth from the north to the south. This can be done fiscally - in other words through a bail-out fund into which Germany et al put comparatively more cash. It can be done monetarily - by the European Central Bank specifically buying the debt of the most troubled euro members and/or provoking enough inflation to erode German living standards and counteract Greek deflation. But either of these methods is a transfer of living standards all the same, and so ought to be decided by (preferably elected) politicians rather than central bankers.

It is hard to see why the market would be convinced by any solution which didn't have this kind of certainty. And as Mario Draghi's comments today underline, so far what we have is a kind of hodge-podge of half-measures which look a little like quantitative easing but without any of the necessary firepower to take on such a seminal crisis.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 11:01:30 AM EST
[ Parent ]

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