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..Once the crisis hit Italy,

What is this crisis? A real economy crisis or financial crisis? The latter has nothing to do with the former. If the banks have wasted their capital, they should go bankrupt. Debts are cancelled and then ECB provides liquidity to real economy. It not more complicated than this.

by kjr63 on Wed Sep 21st, 2011 at 11:24:51 AM EST
Nice sentiment, but yes it is more complicated.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Wed Sep 21st, 2011 at 11:43:20 AM EST
[ Parent ]
The problem is that, because utility banking is an essential infrastructure, banks don't "just go bankrupt". Continued operation of the payment and clearing system needs to be ensured throughout the bankruptcy process. That's why banks are usually subject to a special resolution regime. Governments may have to recapitalise the utility part of the bankrupt bank. Since governments cannot be funded by the ECB they may not have the fiscal capacity to do so. In addition, because of free movement of capital across internal EU borders, entire countries can be subjected to "runs" as has in fact been happening for many months if not years.

In the worst case scenario, all cash in the EU might end up in German banks while both the banks and the governments of deficit countries go bankrupt as a result of a generalised deposit run, while the banking supervisors and central banks at both the national and European level wash their hands of the whole thing because of "free movement of capital".

And, of course, a "banking" crisis is both a "real economy" and a "financial" crisis.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Wed Sep 21st, 2011 at 11:49:02 AM EST
[ Parent ]
..Since governments cannot be funded by the ECB they may not have the fiscal capacity to do so.

If that is the case they must create new currency. Economy cannot feed the parasite forvever.

by kjr63 on Wed Sep 21st, 2011 at 06:19:26 PM EST
[ Parent ]
It seems to be accepted that parasite bankers and financiers must be endured.

Even Marx knew better.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 10:25:16 PM EST
[ Parent ]
The ongoing financial crisis creates the real economy crisis by way of the debt-crisis.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Sep 21st, 2011 at 01:55:25 PM EST
[ Parent ]
Of course. The less there are interest, rent, monopolies and capital gains, the more healthy is the real economy. That is really the opposite what we are told every day.
by kjr63 on Wed Sep 21st, 2011 at 06:22:35 PM EST
[ Parent ]
kjr63:
A real economy crisis or financial crisis?

if regulation had been effective they wouldn't be so linked.

that's the idea of reinstalling glass-steigel or ringfencing as the brits call it.

problem is they are talking about it, not doing it, and the date it's enacted is so freaking far in the future they may as well not bother at all.

with the usual delusions of megalomnania and hubris they fondly imagine the people are too stupid to ever believe their friendly local bank where they keep their savings are lying conniving thieves, for ever and ever amen.

wonder of wonders, people start getting a clue when their savings go down the crapper and bonuses for the lords of the universe keep rising.

pass the port charlie, what's that commotion below deck?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Sep 21st, 2011 at 03:07:38 PM EST
[ Parent ]
The problem is the de facto "bankruptocracy" cited elsewhere in this diary by TBG. Despite have been, in effect, insolvent and bankrupt, these institutions and their largest investors retain control over the governments they have captured. The only solution that would offer a way forward is to write down the debt to levels that can be paid, but this debt is owed to politically powerful individuals who will see all merrily go to hell in handbaskets before they will agree to accept losses that wipe out their wealth and power. The way out to a better future involves dealing effectively with that ugly fact.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 21st, 2011 at 05:22:39 PM EST
[ Parent ]
Gee, Obama's pretty close with his "Tax the Rich" and then all we need is a serious Tobin tax?

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Wed Sep 21st, 2011 at 10:27:56 PM EST
[ Parent ]
I will believe Obama is doing more than just posturing for the progressives when he orders investigations and prosecutions of multiple frauds on Wall Street. Had he wanted to do ANY of the things he again hints and implies he now wants to do he could readily have done them prior to the elections in Nov. 2010. Now he had convenient excuses as to why the Republicans are preventing him from doing what he now claims he wants to do.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 22nd, 2011 at 12:27:06 AM EST
[ Parent ]
Also when the "tax the rich" goes beyond, "the rich ought to pay the same rate as the middle class", to, "the rich ought to pay a higher rate than the middle class".

But he's running for the "independents", and since the Hedge Fund wing of the Democratic party is already center-right, the Hedge Fund wing conception of "playing to the independents" is playing to the ground between the center-right and the radical right.

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 Thu Sep 22nd, 2011 at 01:05:43 PM EST
[ Parent ]
The famous Independents™.  A group comprised of equal parts of people more Conservative then the GOP and ignoramuses:

NEWSWEEK recently asked 1,000 U.S. citizens to take America's official citizenship test, 29 percent couldn't name the vice president. Seventy-three percent couldn't correctly say why we fought the Cold War. Forty-four percent were unable to define the Bill of Rights. And 6 percent couldn't even circle Independence Day on a calendar.

granted most of the former are a subset of the latter ...

But.

Still.

 

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Sep 22nd, 2011 at 01:11:37 PM EST
[ Parent ]
Yes, US elections are generally decided by people who don't start paying attention to politics until September of the Presidential election year. The main influence of the electoral "base" of each party in Presidential years is deciding which candidates are available to low information voters to choose from.

So, of course, the radical reactionaries have invested quite a bit into working out how to feed those people memes for the majority of the time that they are not paying attention, that pander to their existing preconceptions while favoring the radical reactionary candidates.


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 Thu Sep 22nd, 2011 at 03:41:08 PM EST
[ Parent ]
Not surprising, given that even Newsweek couldn't get America's official citizenship test right. The only question on the Cold War is
During the Cold War, what was the main concern of the United States?
by gk (gk (gk quattro due due sette @gmail.com)) on Thu Sep 22nd, 2011 at 04:15:08 PM EST
[ Parent ]
FREEDOM!
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Sep 22nd, 2011 at 04:55:56 PM EST
[ Parent ]
The two of you are obviously among the 73% Newsweek talks about....
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Sep 23rd, 2011 at 04:15:51 AM EST
[ Parent ]
I take it that the correct answer was "finding plausible reasons to keep up military budgets!"

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 Thu Sep 22nd, 2011 at 10:17:17 PM EST
[ Parent ]
The US fought the Cold War o keep the World safe for Democracy.

Democracy is so precious, to the US power elites, it had to be locked-up in a bank vault, guarded by the US military-industrial complex, and never, ever, allowed to 'roam free.'

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Sep 23rd, 2011 at 01:49:59 PM EST
[ Parent ]
Poorly worded question. If that's the answer, the question is, "What did the US claim was its main concern during the Cold War?

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 Sat Sep 24th, 2011 at 02:28:54 PM EST
[ Parent ]

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