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The German federal government in 2001 already spent more than 16% of its budget only to pay interest alone - one in seven tax Euros goes directly to the banks, without actually helping anyone.  Meanwhile streets and public infrastructure crumble, the social net is subject to increasing budget cuts and the ability of the political system to effect change is shrinking every day.

Which is an excellent argument for changing the EMU treaty and letting all governments borrow directly from the ECB that they own. That would also solve the immediate crisis in the trade deficit countries as there would be no debt auctions to speculate on. Instead of doing as is done today and letting ECB borrow money to banks that borrow to states. Remember that all money must start from the central bank anyway.

Of course, removing this subsidy from the banks would quicken their demise as the European banks are systematically insolvent, a fact that all our politicians are busy papering over by insisting that all debts should be repaid. If you don't trust me on the that, trust Mervyn King:

US embassy cables: Mervyn King says in March 2008 bailout fund needed | Business | guardian.co.uk

1. (C/NF) Since last summer, the nature of the crisis in financial markets has changed. The problem is now not liquidity in the system but rather a question of systemic solvency, Bank of England (BOE) Governor Mervyn King said at a lunch meeting with Treasury Deputy Secretary Robert Kimmitt and Ambassador Tuttle. King said there are two imperatives. First to find ways for banks to avoid the stigma of selling unwanted paper at distressed prices or going to a central bank for assistance.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Sat Feb 18th, 2012 at 04:22:36 AM EST
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