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 The financial crisis of the past week, that claimed the leaders of two European governments, came within a whisker of recreating the 2008 Finance Crisis, but was averted by timely action from European financial leaders.
   At least that is how it is being reported in the media.

 Prime ministers fell, markets shook and there were rumours that the eurozone would split up. But it survived – for now
 The stock market rallied on news of new austerity measures, a former central banker becoming leader of Greece's new government, and agreements on a new bailout plan.

  The thing is, this was never a stock market problem. This is a credit market problem, and the credit markets don't believe any of it. Most importantly, they don't believe in the bailout.

 Sources said the EFSF had spent more than € 100m buying up its own bonds to help it achieve its funding target after the banks leading the deal were only able to find about €2.7bn of outside demand for the debt.
    The revelation will be seen as a major failure and a worrying sign of future buyers strike after EFSF officials and their bankers had spent recent weeks travelling the world attempting to persuade key investors, including China's national wealth fund and Japanese government funds, to buy its bonds.
 To put this as plainly as possible: a central bank being forced to buy up the debt that it just issued, in order to hide the fact of the failure to find buyers for its debt, is the perfect example of a Ponzi scheme reaching its end game.

  The stocks markets have rallied, and rallied again, on every rumor of a European Central Bank bailout. Most of those rumors have involved China being the ultimate "dumb money" and using their vast currency reserves to buy into a risky bailout plan.
  Without the bailout plan, a plan that involves holders of Greece's debt in the credit markets to willingly take 50% losses, none of these rumors amount of anything. The entire stock market rally is based on an illusion.

  While the financial media reassures us that the crisis will be narrowly averted, leaders in Europe are coming to terms with the inevitability of the Euro's failure.

 Germany's government has worked out contingency plans in the event that Greece has to quit the eurozone, according to a report published in Der Spiegel magazine, due out Monday.
...
   German finance ministry experts were working on one scenario, under which a Greek exit from the eurozone went off without too much difficulty.

Greece's departure might even be good for the eurozone, because "without the weakest link the chain of member states in the zone would be strengthened," the magazine reported.

But it had contingency plans for a second, more serious scenario, in which Italy and Spain found themselves in turn targetted by the markets.

A third, doomsday scenario, was also being studied, the magazine reported.

In this one Greece defaulted completely -- unable to cope with the consequences of a return to its former national currency the drachma -- and dragged other vulnerable countries down with it.

 To put it bluntly, scenario #1 is no longer possible. We've reached scenario #2 this week.
 After punishing Greece, Ireland and Portugal for their rising debt loads, the bond market is now targeting Italy, pushing bonds yields in the euro zone’s third-largest economy above 7 percent as the nation’s lenders prepare to refinance $120 billion of debt maturing next year. Italy’s $2 trillion in liabilities exceed those three countries combined, plus Spain.
   “The banks are deleveraging on a tightrope,” Alberto Gallo, a credit strategist at Royal Bank of Scotland Group Plc in London, said in an interview.
 There are three significant issues in these two sentences that must be examined.

   First of all, 7% is an important symbolic level. It was the level in which Greece, Portugal, and Ireland all became locked out of the credit markets and were forced to get bailouts from the European Central Bank.

  The second issue here is the banks, most of them Europe's banks, that are giving up on Italy's debts. Most likely the drop in value of Italy's bonds is forcing to sell. But who are the buyers if China isn't? There's a real risk of selling into a vacuum, which is a similar situation to when Wall Street had to dump mortgage-backed securities on the market in 2008.

 “The Italian banks are trapped,” said Roger Doig, a London-based analyst at Schroders Plc, which manages about $58 billion in fixed-income assets. “They are where they are and that’s with the Italian sovereign. The austerity required if the sovereign wants to remain in the euro zone means there’s going to be a recession, which will mean losses for the banks.”
   “The market is pricing in an Italy event and assuming that Italy fails,” said Patrick Lemmens, a senior money manager who helps oversee about $13 billion, including Intesa Sanpaolo shares, at Robeco Groep in Rotterdam.

   The third issue here is Italy's $2 Trillion in liabilities. Italy has the third largest debt market in the world. It's debts are 2.7 times larger than the debts of Ireland, Portugal, and Greece combined. There is simply no possibility of anyone bailing out Italy. It's too big. It's not even an option, even if China and Japan were willing to buy the debt, despite whatever else you might hear.

  Italy shouldn't be in this situation because its fiscal situation isn't bad, despite its debt load being very large. However, the rise in interest rates is forcing it into insolvency. And the same banks that Europe's citizens are sacrificing to save are the ones now responsible for this situation.

  Which brings us to scenario #3, the doomsday scenario which is now a real possibility.

  The "spread" or gap between French and German 10-year bond yields has never been higher, as investors skip over France and invest in its safer neighbour, and the government's borrowing costs are rising...
   "After Greece and Italy, France?" worried Le Monde's Friday headline, over a stark graphic showing France's 1.7 trillion euro debt just short of Italy's 1.9 trillion and dwarfing Europe's trillion-euro bail-out fund.
   "Let's not have any illusions. On the markets French debt has already lost its AAA," said Jacques Attali, advisor to former president Francois Mitterrand and former head of the European Bank for Reconstruction and Development.
 There are two enormous problems here: #1) France's banks are extremely over-leveraged on Italian debt, not to mention having exposure to already defaulted Greek debts, and #2) if France loses its AAA-rating then it can no longer being a part of the EFSF (i.e. the bailout fund). That leaves only Germany to bailout all the rest of Europe.
   While it is possible that Germany may become the "China dumb-money" of Europe. it is also very unlikely. Germans are already protesting.

  France is part of "the core" of the Euro. If France goes down then the Euro is finished.
That's why it is necessary for Germany's plan for kicking out weak members like Greece needs to be put into effect.
   It really has come down to a matter of Europe cutting its losses now or losing the entire monetary union.
  Remember that the Euro was recently considered the #2 reserve currency of the world. A completely failure of the Euro would put into question the entire world's monetary structure.

  The problem is that we are talking about 17 governments that rarely agree on anything. They are signed into an agreement that has no mechanism for countries leaving the Euro. Drastic actions need to be taken, and that is very hard to do while governments are collapsing.

   How this all plays out is a question of politics, which is nearly impossible to predict. The only things for certain is a) the Euro as it currently exists is finished, b) more austerity and bank bailouts aren't going to fix this, and c) if things keep going like they are then we will be looking at a financial crisis even bigger than the one in 2008.
  The losses of Wall Street were papered over by TARP in 2008. This time there is no possibility of a TARP because the governments of Europe themselves can't borrow.

 "[austerity] is imposing pain for pain's sake, and it is going to cause creditors to collect even less on their Club Med debts than if austerity were abandoned. Even in the early 1930s they weren't as bad as this," said Charles Dumas from Lombard Street Research.
   Humayun Shahryar from the hedge fund Auvest said the eurozone faces a "major economic collapse", perhaps with double-dgit falls in GDP. "European banks are massively over-leveraged and almost every one is worthless if you mark to market. This is going to be worse than 2008 because they have run out of bullets. The sovereign states are not strong enough to stand behind the banks," he said.

[Update: The person nominated for Prime Minister of Italy is Mario Monti. Get this - he's an economic advisor for Goldman Sachs. The vampire squid itself.
   And the guy who recently took over the ECB, Mario Draghi, is also a former executive of Goldman Sachs.
   The vampire squid, long in control of the Treasury Department, is now taking over the world.

  This article sums up the situation perfectly.

It looks as though, by Monday, both Greece and Italy will be ruled by so-called ‘technocratic’ governments. Even though both Greek prime minister George Papandreou and Italian prime minister Silvio Berlusconi were elected comfortably in parliamentary polls and were never defeated in any vote of confidence in parliament, they have been ousted – to be replaced by unelected ex-central bankers and former executives of hedge funds and investment banks. From now on, financial markets will rule directly over the lives of the Italian and Greek people.
 Something tells me that if I was to investigate the financial history of Latin America I would find something very similar.

Originally posted to gjohnsit on Sun Nov 13, 2011 at 07:23 AM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, The Royal Manticoran Rangers, and Community Spotlight.

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  •  Tip Jar (276+ / 0-)
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    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Sun Nov 13, 2011 at 07:23:37 AM PST

    •  If by facade you mean the misguided.... (31+ / 0-)

      ...belief that one day Greeks and Germans would consider themselves European over and above citizens of their own countries, you are correct.

      In fact, the trend over the last 100 years is to fragment into more and more tribes.

      How anyone could believe that the Spanish and Greek wold be content with being subjects of a federal government based in Berlin is beyond me.

      Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

      by PatriciaVa on Sun Nov 13, 2011 at 09:16:34 AM PST

      [ Parent ]

      •  I was a milimeter from the recomend click... (19+ / 0-)

        then I read your last sentence.

        I really don't get it.

        This irrational hatred of the Euro by the British and many Americans is bad enough.  The euro itself is a great achievement and ectremely convenient and adavantegous for everybody involved.

        And had everybody played by the rules, it would still be rock solid.

        But what really enrages me is that suddenly those countries that more or less DID play by the rules are vilified  

        Why on earth would you do that? Why on earth would you advance demagogic, nationalistic crap arguments?

        Why would you intentionally fuel anti-German sentiment?

        I understand it with the Greeks - the anti German tones  there are stupid and misguided, but they are afraid, and they look for somebody to blame, and even though neither fear nor rage are good advisors, the feelings themselves are valid.

        But you sit comfortably in the US, So why would you try to sabotage the most ambitious and impressive project to bring people together for a long time, why would you instead opt to sow hate and discord among the people?

        Why?

        •  "most ambitious and impressive project"?? (22+ / 0-)

          It's a flawed project.

          The architects of the EuroZone realized that monetary union without fiscal unity can't function.  They also realized that a crisis would inevitably test the viability of the monetary union (the US would not be viable without a permanent fiscal transfer from the richer states (California) to the poorer ones (Alabama)).

          But they gambled that when this happened, the citizens of each and every European country would gladly cede sovereignty in exchange for viability of the project.

          They were wrong.

          But they insist on doing so anyway.  How many overpaid Eurocrats (only Mexican lawmakers earn more money) have you heard argue that the German are Italian voter is too ignorant to realize what's in their best interest?  

          And over the past two weeks, Brussels has imposed two Viceroys, one in Greece, the other in Italy.

          Am I'm supposed to applaud this?

          P.S.  I apologize for not making myself clear.  I don't blame Germany for this mess.  Germans are simply acting in their best interests, as they should.  

          And I do believe in nationalism, and do not apologize for it.  

          Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

          by PatriciaVa on Sun Nov 13, 2011 at 01:23:38 PM PST

          [ Parent ]

        •  you mean play by German rules ??? (11+ / 0-)

          yeah - great. Deutschland Deutschland ueber alles.

          Germany has used Europe as a market for it cheap products but is unwilling to do anything that can improve the devastating unemployment in many of its member states. Is even reluctant to 'bail-outs" even so the money is from profits made in Europe because Germany is the China of the region producing cheaper than anybody else, but leaving them in the prison of low inflation that leaves them no chance to adjust their labor costs. This is a deeply unjust system that is made to only benefit Germany. The rest of all countries is being described misery in form of austerity measures that will push them further into a recession and drive the unemployment higher. Because low inflation in Germany means deflation in Spain and Italy. It is a criminal way to lead Europe. This is the worst rebirth of the German Empire I could have thought. Absolutely irresponsible.

          •  harsh words, but Germany, the US, China (4+ / 0-)

            all have global responsibilities that go beyond their narrow national interests. And with the right balance Gernany will benefit from a strong Europe. It is also really important for long-lasting peace. I do think that with German leaders like Helmut Kohl and Joschka Fischer we would have seen a decisive and prompt response already very early with Greece. Not so with Merkel and Schaeuble who have behaved like accountants for the German banks with a complete absence of a political vision for Europe. What a disastrous failure of the Merkel administration!

            •  global what? (1+ / 0-)
              Recommended by:
              Cliss

              germany, china, US? what global who?  please, self interest is all there is and has ever been.

              Bad is never good until worse happens

              by dark daze on Mon Nov 14, 2011 at 10:13:26 AM PST

              [ Parent ]

              •  there is a difference between short and long-term (1+ / 0-)
                Recommended by:
                HeyMikey

                narrow interest and a better understanding of the global interdependence. Helmut Kohl and Joscka Fischer knew this. The current Germany has forgotten about this. They just listen to their banks who are only interested in payments on their debt.

                •  "Postwar," by Tony Judt. (3+ / 0-)
                  Recommended by:
                  gjohnsit, tari, melo

                  http://www.amazon.com/...

                  This is a wonderful book, tracing European history from 1945 to about 2004.

                  The European leaders of that era more or less understood that any hardships required to build and maintain the EU were as nothing compared to the hardships the Europeans had inflicted on themselves for millennia through war after war after war. The Germans were delighted to be needed for the Common Market to work, because it was the beginning of building a new, peaceful relationship with the countries who had been their enemies for centuries. They were no longer enemies or pariahs--they were becoming allies.

                  The present generation of European leaders seems to have forgotten what the real stakes are. They need to take a field trip to Verdun, to take a long look through the windows of the Douaumont Ossuary; they need to visit the DNA labs identifying the bodies from the mass graves around Srebrenica. Then they need to do whatever it takes to save the EU.

                  Whatever it takes.

                  "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

                  by HeyMikey on Mon Nov 14, 2011 at 10:59:45 AM PST

                  [ Parent ]

            •  Kohl vs Merkel (0+ / 0-)

              I am a German citizen.
              For all I know, Germany currently does profit from the Eurozone. Without the Euro, and low-performing countries like Spain and Portugal* keeping it low, if we still had our own currency, it would be way overvalued like the Swiss Franc currently is.
              (*Not mentioning Greece here, because Greece should never have been admitted. They cheated to get in. Had they not done that, they would be better of now and everyone else as well.)

              About Kohl, Fischer (that would actually be Schroeder, Fischer was foreign minister under chancellor Schroeder), and Merkel, and leadership:
              I don't care about "leadership". What's leadership good for if it is decisive and impressive but leads to bankruptcy?
              Kohl left us an enormous pile of debts after completely wrecking eastern German economy. Do I want him to handle this crisis? Hell no!
              Fischer was never much involved in finances as far as I know. I do respect his overall policies but would not connect him to finances much. Schroeder liberated the financial markets which faciliated the 2008 crises. Do I want them to handle the current crisis? Rather not.
              Merkel is a person I rather detest because she slimed up to Bush when he staged the Iraq war even though she knew as well as everyone else there was no good reason for it. She gained a lot of respect in my eyes since, including in handling the Euro crisis. You want her to display "leadership" - what should that have been? We are supposedly a democracy here. While Germany should have much weight in the EU, being the most populous country, there is really no good reason why our head-ofgovernment should be able to boss the other states around. Merkel did not. She cobbled agreements together. That's as it should be and I do respect her for that.
              Badgering Weber out of chairing the european central bank and getting Dragi in is not something I respect her for. But I'd still take her over Kohl. Maybe like taking Bush I over Reagan or some such.

              Freedom is not just a word. 'Freedom' is a noun.

              by intruder from Old Europe on Mon Nov 14, 2011 at 09:58:45 PM PST

              [ Parent ]

              •  you pretty much represent German interests (0+ / 0-)

                and is why Europe will likely break up. Unless Germans see a calling in Europe just like Kohl saw it in a United Germany that includes the former East it is not going to work. Kohl got it right. This is why politics at some point needs to be above the profits of the German banks. German banks only have a short-term interest in their interest payments on their loans. But what you need here is a long-term perspective for a stable and prosperous Europe. A united Europe is the only chance for Germany to be a positive force with the European nations. Endorsing the European Central Bank to protect all nations from speculative attacks. Not by spreading austerity measures, but by generating jobs in all European nations.

                •  btw - nothing wrong with representing German (0+ / 0-)

                  interests. Describes very well the political problems Europe faces.

                •  far off from reality (1+ / 0-)
                  Recommended by:
                  Claudius Bombarnac

                  Europe and the Eurozone are not the same.
                  A country possibly leaving the Eurozone is not the same as leaving the EU. See Sweden and Denmark - they meet the criteria (unlike Greece) and could join the Eurozone anytime they wanted; they don't want; that's fine. Poland will soon be ready to join but doesn't want to - that's fine as well. Every country is free to decide.

                  Kohl made a reasonable decision in rushing the German reunification. It may just as well have been a once in a century chance; nobody could know back then.
                  But, he let the eastern German economy crumble completely and let millions of taxpayers' money get into corporate pockets by lack of oversight in privatizations. No, I most certainly don't want him back in major finances, and it was most certainly not about a European vison.

                  Endorsing the European Central Bank to protect all nations from speculative attacks. Not by spreading austerity measures, but by generating jobs in all European nations.

                  To the best of my knowledge, generating jobs (while welcome) is not one of the jobs the ECB is tasked with, and I couldn't tell how they would accomplish that. What they are tasekd with is avoiding inflation.

                  Freedom is not just a word. 'Freedom' is a noun.

                  by intruder from Old Europe on Tue Nov 15, 2011 at 09:25:33 PM PST

                  [ Parent ]

                  •  the avoiding inflation paranoia is the problem (0+ / 0-)

                    again and again the ECB has lowered economic growth particularly since 2008 because of an imaginary inflation thread. They have completely failed. Also, the FED in the US has a responsibility in promoting high employment. This very narrow short-sided and factually wrong policy of the ECB can be blamed for many of the problems that we see.

                    BTW, this tread is basically closed - we can freely continue our conversation :)

                    •  If you were on minimum wage ... (0+ / 0-)

                      ... and seeing living costs like food and rent rise because of inflation, I imagine you would appreciate inflation less.

                      I do concede that inflation would help the states pay their debts or at least the interest on it - by burning the citizens' savings.

                      Be that as it may, the ECB is supposed to keep inflation low, and is not supposed to see to job growth, and even if some EU state gouvernment wanted to change that, a single state could not.

                      Freedom is not just a word. 'Freedom' is a noun.

                      by intruder from Old Europe on Wed Nov 16, 2011 at 07:51:30 PM PST

                      [ Parent ]

        •  I didn't see it (5+ / 0-)

          as a smear on Germany, it was a comment based on reality. The very recent history in Europe dictates that trust is bound to be a problem when times get tough.

          As Faulkner (famous southern writer) said; "The past isn't dead, it's not even past."

        •  Full Spectrum Dominance does require that the U.S. (2+ / 0-)
          Recommended by:
          melo, gjohnsit

          … methodically sabotage any and all developments that might conceivably bring forth a rival for supreme planetary power on the world stage . . .

          48forEastAfrica - Donate to Oxfam The Dutch kids' chorus Kinderen voor Kinderen wishes all the world's children freedom from hunger, ignorance, and war.

          by lotlizard on Mon Nov 14, 2011 at 08:26:57 PM PST

          [ Parent ]

          •  well said (2+ / 0-)
            Recommended by:
            lotlizard, gjohnsit

            even, and maybe especially if that development was winning hearts and minds through examples of 'soft' power foreign policy, regulations against corporate monopolism wrt microsoft, monsanto, resistance to the surveillance of europeans by USA intelligence agencies, protests about rendition etc etc.

            the mindfucking neoliberal soul rot that has spread to europe's rightist politics and helped to give us (even dirty) business-uber-alles social policies trying to run whole countries, and now the whole EU, as giant corporations, who happily get themselves neck deep in bankster debt, and whose profligacy must now be repaid by those who had no hand in these machinations.

            corporations can go bankrupt and dissolve, less big a deal.

            (except for the workers!)

            but whole countries with a debt pistol at their heads?

            banking is useful and necessary, casinos serve no socioeconomic purpose of any true value. they just milk and churn cash from the stupid cows, the 99%.

            why? just kos..... *just cause*

            by melo on Tue Nov 15, 2011 at 01:51:56 AM PST

            [ Parent ]

        •  None of them played by the rules... (2+ / 0-)
          Recommended by:
          melo, gjohnsit

          Germany and France have debt ratios much larger than allowed by the treaty.  

          Germany took full advantage of being part of the Euro.  They out-competed the Italians and the Greeks, etc.  Yes, they did it on their own merits, if you want to say that, but in the end they are also partially responsible for the whole EZ ending up completely imbalanced.  

          The EZ simply was a poorly thought out project.  It had no transfer mechanism, no central government to coordinate budget matters, and no real plans for how to deal with a country that gets in trouble, it was just assumed it wouldn't happen.  

          The whole thing is a complete disaster and frankly deserves to fail.  The idea might have been great, but the actual implementation was terrible.  

          In addition, in today's world of electronic payments, the convenience of the Euro also isn't as much as it otherwise would be.  I can take my ATM card and hit an ATM in Britain, or Norway, or France, or the U.S. and whatever currency that place operates on will come out, at a very competitive exchange rate.  

      •  Put it to a vote (2+ / 0-)
        Recommended by:
        Euroliberal, aufklaerer

        And you will be VERY surprised of the results, I think you all don't really know the Mediterranean countries. Read the polls, even now.

      •  Not about people, it'as about money/control. nt (4+ / 0-)
    •  Just the start (CDSs) (13+ / 0-)

      If one of the big ones roll than we will go into a recession as two way trade is around 500B and will drop like a rock.

      There are also a slew of speculators who bought...wait for it...here it comes....Credit Default Swaps on the PIIGS debt.

      Yes that's right, they are baaaack, bigger and badder then ever before. The warnings many of us threw out in 2009 about freezing or regulating them went by people's ears because frankly most of them didn't know what they were and didn't know how they caused problems. I wouldn't say that everyone knows about them, but at least more than the last time they blew up the world.

      Problem is, the debts here are much much higher which leaves doubt on which counter-parties can pay and which can't. Keeping in mind the 2005 Bankruptcy reforms made these derivatives the top secured position in any bankruptcy.  

      The companies and people that bet against the Greek debt are screaming for a payout once they declared there would be a 50% haircut on the bonds. But there seems to be a technical loophole that has yet to be worked out if this is an official "event" that would trigger the dunning of all the counter parties who sold CDSs. At the least there is increased demand for additional collateral for those who sold the CDSs (like a margin call)

      Finally keep in mind the process of "netting" which they did last time which is buy a credit default swap at a low price and sell a credit default at a much higher price to another counter-party. If one major counter-party fails then like domino they all go down. This is only for the rich people. So look to them to turn to us with a ferocity unmatched in history to make their bets good.

       With this debt level, that's a guaranteed event.

      However, this ain't 2008 and we can't bail the world out although that won't stop Bernanke from trying. After all, this is the 1% against the 1%, and they will not accept defeat in their quest to steal every penny this isn't nailed down worldwide.

      Ahh , remember that brief opening in 2009 when the Obama administration could have slammed the window shut on the tentacles of the vampire squids but instead, they let them all in while selling us all out.

      The bottom line is, there is no safe place for your money right now except your mattress. Those of you that still have some left.

      •  Good report. Do you know who the counterparties (3+ / 0-)
        Recommended by:
        jeanette0605, Dburn, Cliss

        to the CDSs are? I understand all the big US banks have purchased them to reduce their exposure on the European bonds they hold.

        I think there might be some sleight of hand going on here. Did the EU banks sell the CDSs to the US banks to get them to buy the EU bonds?

        The whole thing stinks. Just like the mortgage meltdown, the UE crisis is also susceptible to systemic risk. That's what happens when the relationships in the financial markets becomes incestuous.

        •  pluto mentioned a little casino (4+ / 0-)

          in the city called Markit if i remember right it was GS in the back and jp morgan and chase in front who sold greek debt plus the CDS to the european banks and "investors"
          oh and they recently have put it under FDIC protection.
          so i guess the answer is the US tax payer is the counterpartie
          but this is based on rumors because those OTC are hard to track from outside the banks

        •  Wall Street is the counterparties (4+ / 0-)

          I don't have the article close to me right now, but I've read that while European banks hold the sovereign debts, it is Wall Street banks that have sold them credit default swaps on those debts.

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Mon Nov 14, 2011 at 04:38:35 AM PST

          [ Parent ]

          •  The US banks are only holding about $200 billion (2+ / 0-)
            Recommended by:
            gjohnsit, Cliss

            according to Bernanke. And, they have also hedged much of their own EU debt with someone else. Basicly, they are in the position where they are writing CDS's on their own debt. This would entail considerable systemic risk if any country would default.

            You can say you are insured and risk free right up to moment that the insurance is actually required. Then the house of cards comes tumbling down and the 99% pays the costs.

            BTW, I wonder who is holding the trillions that are missing?

            US Banks' Exposure to Europe Is 'Manageable': Bernanke

            While a recent report showed that U.S. financial companies have nearly $200 billion in net exposure to Greece, Ireland, and Portugal, the amount is "manageable relative to their capital," according to a July 14 letter Federal Reserve Chairman Ben Bernanke wrote to members of Congress.
            ...
            The letter, obtained by CNBC Tuesday, said that most of the $200 billion comes in the form of credit-default swaps (CDS) [cnbc explains] sold by financial institutions on the debt of those countries. The amount doesn't take into account purchases by the banks themselves of debt protection against default, Bernanke wrote.

        •  Most of the TBTFs sold CDS' (1+ / 0-)
          Recommended by:
          Cliss

          That's the process of "netting" described above.

    •  News of Euro's death have been vastly exaggerated. (4+ / 0-)
      Recommended by:
      penguins4peace, Karl Rover, 815Sox, melo

      This thing will still be around when US Americans are already paying in Remnimbi/ Yuan.

      Germany and France will not let it go down, and they can afford to bail out Greece, easy.

      Germany needed the weaker European economies to devalue its currency, and see: it worked. After the introduction of the Euro, the German (export-oriented) economy soared. Germany was the only capitalist economy that did not suffer in 2008 - among other things, because the Euro is weaker than the Deutschmark ever was. Why would they not like this?

      They (the French and German governments) now succeeded in ousting not one, but two prime ministers - Andreas Papandreou and Silvio 'Buffone' Berlusconi - just by threatening to otherwise kick the country out of Eurozone. Don't you think they'll hold on to that kind of power and happily pay the price of bailing out Greece?

      Americans are jealous of Europe, because they start to realize that American exceptionalism is a myth, and that most people in Europe have it better than they. This shouldn't lead us to wish for Europe's demise.

      "Whenever you find yourself on the side of the majority, it's time to pause and reflect." Mark Twain

      by aufklaerer on Mon Nov 14, 2011 at 07:15:24 AM PST

      [ Parent ]

      •  I don't wish the Euro's demise (4+ / 0-)
        Recommended by:
        eightlivesleft, oldhippie, Cliss, mskitty

        I'm totally impartial on it. I have mixed feelings regarding it, and I certainly prefer Europe's economic system over America's.

         However, it isn't going to last in its current form.
        It may last in a smaller, more stable form, and I hope it does.

          But its going to have to dump some countries. That cannot be avoided.

        "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

        by gjohnsit on Mon Nov 14, 2011 at 07:23:55 AM PST

        [ Parent ]

      •  I am envious, not jealous (1+ / 0-)
        Recommended by:
        aufklaerer

        It was so nice to be able to use one currency in so many different places when I went to school over there. The only thing that sucked was that I was based in London, and the pound was very strong at that point. Oh and Bush was still President, so I had to clarify that I hated that piece of garbage over and over again.

        •  You have the U.S. dollar (0+ / 0-)

          Which can be used all the way from one coast of North America to the other.  And we have a Federal government, too, to help balance out economic imbalances between regions.  There's no need to feel envious, we already have what the Euro is going to have to try to become if it's going to last.  

          •  The Euro is a collobration of many different Govts (0+ / 0-)

            That is a bit harder to work out than a confederation of states. I get your point, but it is different. These nations have histories that go much farther back. Not too long ago they were trying to kill each other all the time. It is quite a feat to be honest.

  •  They miscalculated (31+ / 0-)

    The crash wasn't supposed to happen until everyone had given up their sovereignty and means of resistance.

    I present Judith's Struggle, a story that takes the middle class' spiritual beliefs to their logical conclusion

    by verdastelo on Sun Nov 13, 2011 at 07:57:40 AM PST

  •  TEOTWAWKI (22+ / 0-)

    Exacerbated by the fact that the bankers are going to fight down to the last peasant to keep their wealth.

  •  It's very important that Italian debt (17+ / 0-)

    be bought by Italians.

    Italy taxes the income of Italians and gets a substantial percentage of the interest back on the debt held by Italians in Italy. A 7% interest rate taxed at a 50% personal rate costs the Italian government 3.5% net after taxation.

    If the interest is paid to Italians, then that interest can be spent in Italy to help the Italian economy rather than say the German economy or piling up uselessly in an ECB bank account.

  •  An interesting post (17+ / 0-)
    Financial Terrorists and Anglo Saxon banksters are to blame.

    ...the US [national] debt at 14 trillion for a country of 300 million
    ...
    In comparison, Italy's public debt at 1.3 trillion, is very very manageable.
    Household debt is tiny, yes, those very homeowners are financially secure.

    http://www.guardian.co.uk/...

    •  But with the Euro Italy does not have its own (6+ / 0-)

      currency. Yes, this debt would be manageable. But, Italy became a slave of the Euro. By joining the Euro Italy exchanged its sovereign debt into German debt (this is what is basically is) and Germany is not willing to protect Italy against speculative attack. Stupid really. Unless the Central European Bank is not authorized by Germany to print Euros to purchase Italian debt, Europe will not find stability.

      •  "Speculative attack" (2+ / 0-)
        Recommended by:
        gjohnsit, Iberian

        You are completely immune to speculative attacks if you aren't running current accounts deficits. Italy is in trouble right now because of its own bad planning.

        True the common currency isn't helping matters, but your economy will implode even in your own currency if you run deficits for long periods of time (or, run high deficits for short periods).

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sun Nov 13, 2011 at 03:49:46 PM PST

        [ Parent ]

        •  A cheaper currency (5+ / 0-)
          Recommended by:
          Odysseus, tari, 4Freedom, randomfacts, Matt Z

          would lower italy's trade deficit.  It would be a problem but not a crisis.

          "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

          by Loge on Sun Nov 13, 2011 at 04:23:28 PM PST

          [ Parent ]

          •  Absolutely true (2+ / 0-)
            Recommended by:
            tari, randomfacts

            In theory, Italy's private and public sectors can just cut wages in Euros to force the debt back to parity, but that's a lot harder than devaluing the currency, even though the effect is the same.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Nov 13, 2011 at 04:28:33 PM PST

            [ Parent ]

            •  So, austerity. (2+ / 0-)
              Recommended by:
              gjohnsit, randomfacts

              i see some conscripted savings in Italys future.  The high domestic  savings now to be holding Berlusconi Bonds. Wage drops dont spread the pain as evenly as a devaluation or a partial default.

              "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

              by Loge on Sun Nov 13, 2011 at 04:52:31 PM PST

              [ Parent ]

            •  It's not the same. (2+ / 0-)
              Recommended by:
              tari, Karl Rover

              Uness your debt is denominated in a foreign currency, devaluation has no direct effect on debt burdens. However, deflation increases the burden of debt, since most debt in the economy is fixed nominal. That's why deflation tends to be a cure that kills the patient. As the deflationary cycle progresses, even manageable debt burdens become unmanageable, and that's not taking into account demand-side effects.

              Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

              by Dauphin on Mon Nov 14, 2011 at 03:19:44 AM PST

              [ Parent ]

        •  but the debt evolved over decades (6+ / 0-)

          You cannot do this over night and austerity gets you nowhere because you have no economic growth. It is the austerity virus stupid. Germany is imposing the austerity nonsense everywhere.

          Britian has more debt than Spain but the interest rate is super low - just because they did not join the Euro and have as a nation full control over their bank. Germany's idea to run Europe is based on a very narrow understanding of economic growth and does not do any of the other countries justice. Either they should have never formed the Euro or they should finally form a central bank that is authorized to fight off any speculative attack on any member state. When the ECB can issue bonds it can raise money. It does not just need to print money. We need political unity. "One nation under Europa" is needed. The united States of Europe. Or this thing is falling apart.

        •  I see (7+ / 0-)

          Italy made "poor personal choices" and deserve to pay the price for their "personal failures".

          Where have I heard this before?  That right, Rick Perry and Herman Cain, and every mouth-breathing wingnut, er I mean billionaire ex-Navy SEAL, I ever debated on the Yahoo! boards..

          If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing. ~Malcolm X

          by ActivistGuy on Sun Nov 13, 2011 at 05:07:03 PM PST

          [ Parent ]

          •  Re (1+ / 0-)
            Recommended by:
            soros

            Just because idiot right wingers repeat something doesn't make it wrong. If Italy was running its current accounts at parity (something well within its power) it wouldn't be in this mess at all.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Nov 13, 2011 at 05:19:26 PM PST

            [ Parent ]

        •  What bad planning? (2+ / 0-)
          Recommended by:
          Euroliberal, Karl Rover

          Italy cannot do anything about its current account deficits. No peripheral state can. The reason is that, absent flexible exchange rates or a willingness to devalue, the only way to address current account imbalances is with capital controls, and they are forbidden under EU law, because the free flow of capital is one of the four fundamental freedoms under EU law.

          Now, there is a way to impose them in extraordinary circumstances, but that requires approval by the Council, where the creditor nations have a pondered majority vote. Plus, the process is slow, since, absent emergency sessions, the Council meets quarterly.

          In short, there was no realistic possibility of addressing that problem, even discounting the fact that the dominant ideology dismissed - and still does! - the importance of current account imbalances.

          Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

          by Dauphin on Mon Nov 14, 2011 at 03:17:45 AM PST

          [ Parent ]

    •  Not comparable. (1+ / 0-)
      Recommended by:
      Karl Rover

      ...the US [national] debt at 14 trillion for a country of 300 million
      ...
      In comparison, Italy's public debt at 1.3 trillion, is very very manageable.

      These numbers aren't comparable: one is a sovereign debt, and can't be defaulted on except voluntarily - the U.S. government can always "print money" to pay off its debts. The Italian government, however, cannot issue Euros on its own say so, and must borrow -- and pay interest to do so -- to cover its debts.

      Further, it the U.S. were to "pay off" the national debt, then its monetary policy would lose traction. While "too much" debt is bad (for arguable values of too much), too little would also be problematic as the U.S. government would lose control of its biggest control on the economy.

      •  Debt/GDP... (2+ / 0-)
        Recommended by:
        gjohnsit, Odysseus

        ...is the same economically whether you issue your own currency or not. Issuing your own currency just gives you a second "default" option: instead of just not paying you can print currency and stiff your lenders that way instead.

        Bond buyers are not stupid and understand these factors. The US has low interest rates due to special circumstances that could vanish at any time. Continuing to increase our debt makes this eventuality more likely over time.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sun Nov 13, 2011 at 03:30:14 PM PST

        [ Parent ]

      •  The whole point is they're not comparable (2+ / 0-)
        Recommended by:
        Euroliberal, tardis10

        but that this reflects politics, not economic fundamentals.  

        "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

        by Loge on Sun Nov 13, 2011 at 04:24:39 PM PST

        [ Parent ]

  •  diarist is wrong. they can write off debt.. (2+ / 0-)
    Recommended by:
    Deep Texan, aufklaerer

    as they did in Greece--and they will.

    My best guess was a reflection that did not look back, an image lost in every mirror.

    by Zacapoet on Sun Nov 13, 2011 at 10:40:13 AM PST

  •  Hasn't the US been doing just this quite a lot of (13+ / 0-)

    late?

    To put this as plainly as possible: a central bank being forced to buy up the debt that it just issued, in order to hide the fact of the failure to find buyers for its debt, is the perfect example of a Ponzi scheme reaching its end game.

    I thought I recalled reading that more than once over the last couple of years.

    •  Normally there is another party involved (15+ / 0-)

      The Fed has been issuing lots of debt, which Primary Dealers (such as Morgan Stanley, JP Morgan Chase, BofA, etc) buy and then turn around and sell them right back to the Fed.

        It's pretty much the same, but at least has the appearance of an actual bond sale.

        The ECB couldn't even manage THAT.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Sun Nov 13, 2011 at 12:37:14 PM PST

      [ Parent ]

      •  I've heard that the Fed buys T-bills directly n/t (3+ / 0-)
        Recommended by:
        ozsea1, Seamus D, Deep Texan

        Do you know why they call it the American Dream? Because it only happens when you're asleep.

        by Visceral on Sun Nov 13, 2011 at 01:24:08 PM PST

        [ Parent ]

        •  Not yet (1+ / 0-)
          Recommended by:
          ozsea1

          Pretty close, but not yet.

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Sun Nov 13, 2011 at 01:33:22 PM PST

          [ Parent ]

          •  The Federal Reserve has always bought treasuries (3+ / 0-)
            Recommended by:
            randomfacts, Deep Texan, aufklaerer

            Here is a URL for the Federal Reserves Balance Sheet:

            http://www.federalreserve.gov/...

            It currently holds a very large stock of government securities. It buys these as part of its execution of monetary policy. It has done this for a long time.

            Even other government agencies buy US treasuries. They are considered a safe asset. Social Security, for example, has a large portfolio of US treasuries.

            If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

            by apsara on Sun Nov 13, 2011 at 02:42:41 PM PST

            [ Parent ]

            •  No doubt (6+ / 0-)

              You are correct.
                 But that is slightly different from what the ECB just did.

              The Fed buys the treasuries back after the Primary Dealers purchase them. Sometimes within hours, which would be an illegal transaction for you and me.
                 But at least the Primary Dealers were involved.

                The ECB couldn't even find a major bank that wanted to touch the stuff. And that was on the first $3 Billion auction.
                 It's still got hundreds of billions of bonds left to sell. Not to mention, leverage at 4 - 1 with derivatives.

                 But that's another story.

              "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

              by gjohnsit on Sun Nov 13, 2011 at 02:56:09 PM PST

              [ Parent ]

              •  The Fed (1+ / 0-)
                Recommended by:
                Deep Texan

                isn't the issuer of US treasuries. It only acts as banker to the Treasury department. Government debt is issued by the Bureau of Public Debt in the Treasury Department. Thus, I don't know what you mean by "buys the treasuries back."  The Fed is an independent entity.

                As I understand it, the ECB didn't issue those bonds, the European Financial Stabilization Fund did.

                If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

                by apsara on Sun Nov 13, 2011 at 04:30:45 PM PST

                [ Parent ]

            •  Social Security Does Not Own "Treasuries" (3+ / 0-)
              Recommended by:
              Betty Pinson, apsara, Karl Rover

              The Social Security Trust fund along with the account balances of the Federal Employee Retirement plans are recorded as Federal Debt yes, but they are not marketable securities.  My understanding is that they are senior sovereign debt, payed a statutory interest rate and always redeemable at face value.  This debt is not traded.

              Yes the Federal Reserve owns "Treasuries" along with a whole lot of other assets (who knows what they are holding).  But I am sure they do not hold the same type of debt that is held in the Social Security Trust Fund.  

              There is an exact term for the debt held by the trust funds, at least one of the bright minds around here can help me out with that one.  

              •  Correct... (1+ / 0-)
                Recommended by:
                Deep Texan

                they are not marketable but they are still "safe" assets for the Trust Fund and they are still public debt.

                The point I wanted to make was that the US government has no trouble meeting its financing goals, unlike the EFSF it seems.

                If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

                by apsara on Sun Nov 13, 2011 at 09:52:33 PM PST

                [ Parent ]

      •  there is a political decision (1+ / 0-)
        Recommended by:
        aufklaerer

        NOT to let them do that.

        The ECB couldn't even manage THAT.
    •  No (10+ / 0-)

      and this lies at the heart of Krugman's point about the real problem in Europe. In the US, it is the Federal Reserve buying up bonds. THE EFSF is NOT the European Central Bank. It is the European Financial Stability Fund.

      THE ECB could fight this crisis in Europe by buying up these bonds and playing a similar role that the Fed has played in the US. Eurozone members should unlease the ECB.  

      If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

      by apsara on Sun Nov 13, 2011 at 12:39:52 PM PST

      [ Parent ]

      •  Lol (1+ / 0-)
        Recommended by:
        gjohnsit

        And just push the implosion to the future when it will be even worse.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sun Nov 13, 2011 at 12:41:41 PM PST

        [ Parent ]

      •  Printing money by any other name n/t (2+ / 0-)
        Recommended by:
        gjohnsit, ozsea1

        I'm writing in Lizard People on my next ballot.

        by George Hier on Sun Nov 13, 2011 at 12:54:39 PM PST

        [ Parent ]

      •  The ECB doesn't have enough money. (1+ / 0-)
        Recommended by:
        gjohnsit

        Also, it's job is lending to banks - not states. Germany would never agree to that change in the ECB's monetary policy.

        Lending to countries is the IMF's job. Unfortunately, even the IMF is not big enough unless China bought in. But, China wants concessions the US and Europe are not keen on - movement towards the replacement of the $US as reserve currency.

        China has categorically refused buying EU sovereign bonds directly to help in this crisis. You can be sure they will be one of the first in line at the privatization auctions that will be taking place in the coming years. It's a win-win for China right now if EU doesn't go completely tits up and they lose more of this export market.

        •  A central bank (1+ / 0-)
          Recommended by:
          Claudius Bombarnac

          never runs out of  money. It creates it. The Federal Reserve's balance sheets have grown dramatically in the last 3 years as its holdings of government bonds increased by about $1 trillion even as it was also loading up with mortgage-backed securities.  What many economists are advocating is for the ECB to be as aggressive as the Fed.

          This would not be a change in policy. THE ECB already buys regional government bonds. However, it is reluctant to go all in.

          Here is a Washington Post article on the subject:

           http://www.washingtonpost.com/...

          If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

          by apsara on Mon Nov 14, 2011 at 08:07:01 PM PST

          [ Parent ]

          •  I agree that the ECB has been buying (2+ / 0-)
            Recommended by:
            gjohnsit, apsara

            sovereign bonds but they have been doing it in the secondary markets to get around the ban on monetary financing of governments. Germany is resisting any further purchases as well as expanding the money supply. Germany's greatest fear (from it's past history) is inflation

            Here's another report from the Washington Post

            http://www.washingtonpost.com/...
            Monday, November 14

            European Central Bank lowered bond purchases to $6.2 bln last week despite turmoil in Italy

            The central bank “cannot and should not solve the financial problems of states and banks,” Bundesbank President Jens Weidmann said in a speech in Frankfurt. “These decisions must be made by national parliaments,” he maintained.

            Weidmann said relying on the ECB for help would only take the pressure off governments to reduce debt on their own.

            “With every setback in the efforts of political leaders to find a solution to the crisis the pressure has risen on monetary policy, as allegedly the only actor able to effectively intervene,” Weidmann said.

            Some economists have advocated creating new money to buy large amounts of bonds as a way to reassure investors that Italy can repay its debts. Theoretically, the bank’s ability to print money gives it unlimited financial firepower. But creating new money can lead to rising inflation, whereas the ECB’s main mandate is to keep it low.

            “If monetary policy stretches its mandate to guarantee price stability or even violates the ban on monetary financing of governments, there is nothing less at stake than its credibility, which it has earned with its efforts for price stability over decades,” Weidmann said.

            Frankly, I think that what is going on is theater to force countries to accept austerity cuts and privatization as TINA (There is No Alternative). It's the same game the financial cabal played in South America decades ago.

            •  Well, (1+ / 0-)
              Recommended by:
              Claudius Bombarnac

              that does seem to be the impression from Weidmann's statements, doesn't it? Hmmm. Interesting artlcle.  

              Of course, what he is saying is rather dramatic. Italy can rapidly reduce its deficit at great cost to the economy but it cannot just magically reduce its debt.

              And why would the ECB need to lend directly to governments? That is a red herring. Stabilizing bond markets is about exisitng debt not new debt.

              So national governments are pushed to the brink by turmoil in bond markets while the ECB stands on the sidelines? I would think that would undermine its credibility.

              If you get to thinkin' you're a person of some influence, try orderin' somebody else's dog around.

              by apsara on Tue Nov 15, 2011 at 06:26:01 AM PST

              [ Parent ]

              •  Here's today's take on the crisis and ECB (1+ / 0-)
                Recommended by:
                apsara
                And why would the ECB need to lend directly to governments? That is a red herring. Stabilizing bond markets is about exisitng debt not new debt.

                Stabilizing bond markets is the job of European Financial Stability Facility (EFSF):
                Analysis: Euro zone's souped-up rescue fund risks flop

                http://www.bloomberg.com/...

                ECB Has Little Choice But to Cross the Rubicon: The Ticker

                They've done it before and they can do it again. The members of the European Central Bank's Governing Council have already broken a taboo by buying 187 billion euros ($254 billion) of bonds in a bid to keep a lid on government-debt yields. Council members Juergen Stark -- both German -- announced their resignation in response to the ECB action, which started last year in an attempt to keep Greece from defaulting.
                ...
                Peter Bofinger, an economic adviser to the German government, followed up with his own recommendations today at a conference in Frankfurt by calling on the ECB to set an upper limit for sovereign-bond yields: another way of saying the ECB has to stand behind government debt by printing money. "We are in an emergency situation,'' he said. "If worst comes to worst, the ECB has to act before the financial system fails.''

                German memories of 1920s hyperinflation will have to give way to monetary pragmatism before the ECB can finally put a stop to the dangers of a euro breakup and the inevitable economic turmoil that would follow. The pitfalls of the printing press are well-known: inflation; loss of incentive for indebted countries to reform themselves; political interference; and potential damage to the ECB's balance sheet. But there are few choices left if the euro area is to remain intact.


                This Is The Reason Bond Yields Are Exploding

                The bank (ECB) is reportedly engaging in a drastic liquidity drain today in order to stem the effects of inflation in the markets that has been caused by that bond buying.

                New ECB president Mario Draghi—who took office November 1—emphasized that the Securities Market Program (through which the bank can purchase sovereign bonds on the secondary market) was always a temporary program.

  •  Really? (4+ / 0-)
    Recommended by:
    Iberian, Seamus D, Deep Texan, aufklaerer
    The only things for certain is a) the Euro as it currently exists if finished

    ?

    •  I could be wrong (15+ / 0-)

      I recently predicted that the 3rd quarter would be a recession quarter and I got that wrong.

        BUT the Euro crisis has done pretty much exactly what I've predicted so far, and there are no signs that this is going to change.
        The politicians have kicked the can down the road as much as possible, but that stops at Italy. Italy is a boulder, and it's too big to be kicked.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Sun Nov 13, 2011 at 12:42:08 PM PST

      [ Parent ]

      •  Yes, you're probably wrong. (1+ / 0-)
        Recommended by:
        AdamR510

        No disrespect, you told the story much better than I could have, but I think you're seriously underestimating the German's willingness and capacity to hold on to the plan, no matter what.

        For Germany, a unified Europe is the best vehicle to project political, economical and military power. This is not about short-term profits for them (Germany is the major net-payer of the EU's expenses, including money that goes to building an Autobahn in Poland, Czech Republic, Portugal etc.) - it is about long-term international geostrategical positioning.

        The Germnans have tried to conquer the world by military means, and failed, twice. This time, they're doing it smartly - they're buying their way to power. It's not called DeutschEuropa (GermanEurope) for nothing...

        Which is why they will not let the Euro fail, sunk investments and all. You can take that to the bank.

        "Whenever you find yourself on the side of the majority, it's time to pause and reflect." Mark Twain

        by aufklaerer on Mon Nov 14, 2011 at 07:30:02 AM PST

        [ Parent ]

        •  Germany might not be able to stop it. (1+ / 0-)
          Recommended by:
          gjohnsit

          Italy is too big for Germany to save, even if the German public wanted it.  France's bond yields have recently begun increasing.  

          Germany can't backstop the entire Eurozone.  That is beyond their capabilities.  

  •  Seems like Goldman Sachs (28+ / 0-)

    is training ground for the world's biggest criminals.

    Thanks for the update, personally I don't believe anything that is being reported in the media anymore.

    Be the change you want to see in the world. -Gandhi

    by DRo on Sun Nov 13, 2011 at 01:08:23 PM PST

  •  If you believe Jane Jacobs, the euro was doomed (21+ / 0-)

    from the start. In Cities and the Wealth of Nations, she compares currency fluctuation to a feedback control, such as the way our brain tells our lungs how to breathe based on the levels of oxygen and carbon dioxide in our blood. She goes on to argue that "imperial" currencies are a poor feedback control, especially when they include more than one dominant city region:

    To picture how such a thing can be, imagine a group of people who are all properly equipped with diaphragms and lungs but who share only one single brainstem breathing cener. In this goofy arrangement, the breathing center would receive consolidated feedback on the carbon-dioxide level of the whole group without discriminating among the individuals producing it. Everybody's diaphragm would thus be triggered to contract at the same time. But suppose some of those people were sleeping, while others were playing tennis. Suppose some were reading about feedback controls, while others were chopping wood. Some would have to half what they were doing and subside into a lower common denominator of activity. Worse yet, suppose some were swimming and diving, and for some reason, such as the breaking of the surf, had no control over the timing of their submersions. Imagine what would happen to them. In such an arrangement, feedback control would be working perfectly on its own terms but the results would be devastating because of a flaw designed right into the system.

    I have had to propose a preposterous situation because systems as structurally flawed as this don't exist in nature; they wouldn't last. Nor do they exist in the machines we deliberately design to incorporate mechanical, chemical or electronic feedback controls; machines this badly conceived wouldn't work. Nations, from this point of view, don't work either, yet do exist.

    Nations are flawed in this way because they are not discrete economic units, although intellectually we pretend that they are and compile statistics about them based on that goofy premise. Nations include, among other things in their economic grab bags, differing city economies that need different corrections at given times, and yet all share a currency that gives all of them the same information at a given time. The consolidated information is bad specific information for them even with respect to their foreign trade, and it is no information at all with respect to their trade with one another, as opposed to their international trade. Yet this wretched feedback is powerful stuff.

    In the long run, Jacobs concludes, the feedback provided by imperial currencies causes less robust city regions to wither, eventually leaving only one dominant city region intact, as the fluctuation of the currency responds more and more exclusively to what that one city region needs.

    In the case of the euro, the dominant city region is most likely Frankfurt.

    "The great lie of democracy, its essential paradox, is that democracy is the first to be sacrificed when its security is at risk. Every state is totalitarian at heart; there are no ends to the cruelty it will go to to protect itself." -- Ian McDonald

    by Geenius at Wrok on Sun Nov 13, 2011 at 01:16:00 PM PST

    •  I dunno (11+ / 0-)

      I never read Jane Jacobs.  But I've read a lot of Krugman over the past ten years, and I think he (and others) are suggesting that Greece return to the drachma.  

      If Italy is at risk (and I know it is) then it is time for dramatic measures.

      Fire all the banksters, seize all the assets in those banks, and nationalize the profits.

      It's what Chavez would do: and he has one of the more thriving economies in the western hemisphere.  Argentina has another thriving economy: because it did not give in to the banksters nor the IMF.

      In fact, from what I've read, Iceland -- once on the precipice -- has an incredibly strong economy right now.  Why?  They saw the advice from the IMF and did exactly the opposite.

      Just sayin'.

      Over the past 30-odd years, the Democrats have moved to the right, and the Republicans have moved into a mental hospital. --Bill Maher

      by Youffraita on Sun Nov 13, 2011 at 02:45:47 PM PST

      [ Parent ]

      •  Re (3+ / 0-)
        Recommended by:
        Odysseus, aufklaerer, seaprog

        Iceland doesn't have anything like an "incredibly strong" economy right now. Their economy is a shambles Their currency has been cut in half with respect to the dollar since the crisis. 2 in 5 mortgages are underwater. Living standards have plunged.

        Now, it's still a comparatively nice place to live, it isn't Somalia, but their economy isn't "incredibly strong" over there, more like "taking slight tottering steps back from the abyss".

        I think Iceland did the right thing in telling the IMF to go screw, but let's not kid ourselves here. The country is kind of a wreck and is going to have a long road back.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sun Nov 13, 2011 at 03:42:55 PM PST

        [ Parent ]

      •  Chavez has oil (0+ / 0-)

        the gdp isgrowing but the economy is not thriving, because Chavez is prone to deciding anyone who starts to make money is a threat.

        The IMF has the right idea, that structural reforms are necessary in most instances to get countries access to credit markets again, but thwy tend to pick out the wrong reforms.

        "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

        by Loge on Sun Nov 13, 2011 at 04:31:04 PM PST

        [ Parent ]

      •  What are you talking about? (4+ / 0-)
        Recommended by:
        gerald 1969, Floande, katiec, gjohnsit

        Iceland took IMF loans and did exactly what they told them to do (austerity) in order to get said loans.  Google it.

        FYI, this post is being written from Reykjavík.  :)

        •  Iceland refused to make cuts in their social (2+ / 0-)
          Recommended by:
          gjohnsit, BradyB

          welfare. In fact they increased it as well as raising the wages on the lower paid workers. They increased taxes and added a wealth tax and VAT. This has resulted in a decrease of inequality.

          Ireland, on the other hand, accepted the IMF's requirement of austerity cuts to wages and social welfare programs.

          In addition, Iceland has refused to pay the debts incurred by the private banks unlike Ireland.

          What the IMF did in Ireland was atypical of their normal requirements for loans.

          •  Come up here. (2+ / 0-)
            Recommended by:
            gjohnsit, Claudius Bombarnac

            And tell everyone up here about your notion that the government hasn't been cutting back.  They'll find it very interesting.  ;)

            •  They didn't cut back as much as in Ireland (1+ / 0-)
              Recommended by:
              gjohnsit

              or other countries that have received IMF financing.

              I'm not saying that things are great in Iceland. But, at least the IMF didn't get to rape and pillage the country to the extent they have done in other cases that have left people destitute and completely unemployed for a decade or more. Just a few Wall St. vultures managed to get into Iceland.

              What do you think of Steingrímur Sigfússon?

              http://www.imf.org/...
              Keynote Speech by Minister of Finance Steingrímur Sigfússon
              October 27, 2011

              "IMF allowed us the flexibility to choose"
               

              http://www.imf.org/...
              Professor Stiglitz on Iceland’s Crisis and Recovery
              October 27, 2011

              "unusual among traditional crisis countries with IMF programs, they did not have the kind of austerity that so often pushes the economy down"
               

              •  You're quoting Iceland's minister of finance... (0+ / 0-)

                saying basically that he's done a great job.  What do you expect?  "I've run this country into the ground?"

                as for your second video: 3:56: "Could it have done with less austerity?  Would that have allowed the country to grow more, avoided so many people migrating out of the country?  I think that's an open question.  My proclivity is to say that it could have done with a little bet less austerity"

                This, coming from an IMF guy.

                Here's the sort of news articles anyone who reads the Icelandic news runs into all the time.  Link:

                Next year’s proposed health budgets in Iceland are causing a headache for all involved: from politicians and doctors, to pensioners and regional development agencies. One stark example is in the Westfjords region, where cuts threaten the very existence of Isafjordur hospital and could cause further regional de-population.

                BB.is reports that Eirikur Finnur Greipsson, the chairman of the Isafjardarbaer town council, believes that proposed financial cut backs in the region’s healthcare next year will be a lethal blow that could close the hospital altogether.

                The northern Westfjords region is looking at an ISK 201 million cut from this year’s ISK 1.02 billion. The cuts will almost entirely be focused on primary patient care and will mean a 40 percent cut to Isafjordur hospital’s funding.

                Greipsson says that if the hospital stops having doctors on call, stops diagnostics, closes its X-ray department, closes its maternity ward and its accident and emergency department, it would still face a shortfall of ISK 80 million.

                Some of the knock-on effects of these changes would be the partial or total closure of the operating theatre, an end to endoscopy and colonoscopy services and cancer treatment, among others.

                Societally, these changes could mean a collapse of local healthcare services and the departure of at least 12 doctors and health professionals and their families from the region worst affected by de-population and trying the hardest to improve services and attract new people.

                Many more people would need to drive or fly to Reykjavik for increasingly minor problems – all at the expense of state insurance.

                Finally, many young people leave the Westfjords and then return to raise families. This crucial coming-home could be endangered if the maternity ward closes. Locals gathered in Isafjordur last night in a huge protest (by the small town’s standards). Many businesses that would ordinarily have been open in the evening closed early to allow staff to join the protest to save the hospital.

                The story in the Westfjords is being repeated elsewhere in Iceland – including Husavik and the Westman Islands, where mothers-to-be are potentially facing sea or air travel to Reykjavik in order to give birth.

                Read more: http://www.icenews.is/...

                Next:

                Icelandic Nurses to Work Temporarily in Norway

                The numbers of Icelandic nurses applying for licence to practise in Norway are 17 times higher than in 2008; the nurses go for seasonal work working double-shifts day after day.

                Most of the nurses I work with in the Emergency Room have gone to Norway for a week or 10 days and made about half a million Icelandic krónur (USD 4300 or EUR 3000), Lilja Bolladóttir told Morgunbladid; she is one of many nurses applying for a licence to practise in Norway.

                Flights and accommodation are paid for and for the short work periods, nurses work double-shifts day after day and sleep in-between shift; the money they make is not much higher than they could earn in an Icelandic hospitals for a double-shifts, mbl.is reports.

                “There is too much uncertainty in the Icelandic health care system and the pressure medical staff is under is expected to continue. No one knows what to expect,” Elsa B. Fridfinnsdóttir, chairman of the Nurses Union told Morgunbladid. Wards are mostly understaffed and medical staff is under a great deal of pressure on daily basis.

                “Medical staff in Icelandic hospitals can expect wards to be closed or changes in opening hourse to be announced at any given moment in the present state,” Fridfinnsdóttir told Morgunbladid.

                How about education?

                Unacceptable Cuts To Children
                9.2.2011
                Words by Guy Stewart
                The education of Icelandic children is facing an ominous threat. Funding to schools is being slashed by municipal authorities, which can only have dire consequences for the current generation of children. So Icelanders have a stark decision to make in the immediate future. In a nutshell, citizens must choose between the welfare of their children and increasing taxes to those who can afford it.

                Municipalities face a money crunch because of Iceland's present-day financial woes. Primary schooling makes up the largest part of municipal spending, so municipal authorities direct their attention there. Thus school authorities are being given an ultimatum to cut costs. These cuts are so severe as to blight the education of Iceland's children.

                The recently released document entitled ‘Frekari hagræðing í starfi grunnskólanna’ (“Further optimisation in the operation of Icelandic schools”) released by Samband íslenskra sveitarfélaga (“Association of Icelandic Municipalities”) proposes several strategies for cutting funds to schools. Every one of them lowers the quality of learning. Most are also—at present—illegal.

                The proposed strategies are six in number. The first four rely on getting "temporary" exemptions from education laws, and from the official curriculum (Aðalnámskrá grunnskóla). To summarise:

                1. Permission to shorten weekly instruction time.

                The so-called "5-4-3 Way" refers to the number of hours per week groups of children shall have shaved from classroom time. Grades 8-10 shall lose 5 hours (14%); grades 5-7 lose 4 hours (11%); and grades 1-4 lose 3 hours (10%).

                2. Permission to "transfer weekly instruction time between weeks and months".

                This seems to be a numbers game used to cut the required hours of classroom instruction. This is combined with cutting resources to transportation, school maintenance and food.

                3. Permission to shorten the school year from 180 to 170 days.

                This is self-explanatory.

                4. Permission to decrease elective courses for young people.

                Regulations require that young people have up to a third of their schedule composed of electives (courses tailored to interest or vocation). It is suggested here that authorities take advantage of "maximum flexibility" in the laws in order to reduce the costs associated with such courses.

                5. That changes be made to the proportional distribution between subject areas and subjects.

                This way does not involve changing laws or regulations, but rather reinterpreting the official curriculum in such a manner that the current standardised schedule – hopefully the best possible schedule – be abandoned for a cheaper schedule.

                6. That changes be made to the rights of primary school students to education at the secondary school level.

                Senior primary school students who excel in certain areas currently have the option of taking courses in those areas at the secondary level (“Menntaskóli”). The municipalities and the state share the expense. However, the government now makes no provision for them. It is pointed out in this document that such advanced education cannot be maintained under current laws; but falls short of proposing that it be cut.

                Doublespeak

                In the title ‘Further optimisation in the operation of Icelandic schools’, "optimisation" is my translation of the Icelandic word “hagræðing”, which could as easily be translated as the doublethink term "economising". The word gives the impression of finding a more efficient way of doing things, but is in fact a technocratic euphemism for withering on the branch. To this "economy", money has more value than children. And "optimisation" means making, in human terms, the least optimum decision. Hagræðing.

                The Association of Local Authorities in Iceland, by presenting the six proposals mentioned above, somehow avoids making the obvious proposal: no cuts to children.

                As of their meeting of 21 January, SAMFOK (“The Association of Primary School Parents in Reykjavík”) anticipates that proposed cuts to schools in Reykjavík will harm their work, with unforeseeable consequences for children. The parents say that previous cuts have already gone far beyond acceptable limits, therefore affecting the childrens' quality of life.

                The parents predict a decreased ability to watch over students, leading to an increase in school bullying. Children who need more help with will get less help. Gifted children will not get work appropriate to their abilities; and so on. "Children have only one childhood," they write. "... It will be impossible, later, to rewind and compensate for what has been taken from them."

                School Hell.

                These cuts are unacceptable to the parents. They love their children. However, these cuts are acceptable to municipal governments. Why?

                Two masters

                Accepting the proposition that children are sacred, the parents rightly protest to the municipalities. The municipalities have no money. Ergo, the municipalities must get more money. However, the government has no money to give them. So the government must get more money.

                This is where we run into a roadblock. The obvious solution is for government to increase taxes to those who can afford it in order to save the children from harmful cuts.

                Enter the neoliberal mouthpiece, with the standard baseless dogma about the inherent evil of taxes. Greed is good. To such people, economic austerity is good for everybody but their true constituency: the wealthy.

                But, "No servant can serve two masters; for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and mammon." The municipalities must now abandon harmful cuts to schools and turn to the government for more money. They should not squirm and try to find ways out of their obligations.

                It turn, the government must oblige the municipalities by providing the money they need to maintain the schools at a high standard. Those who have the money must pay up through taxes. To do otherwise is to cannibalise the future of Iceland's children.

                The cuts to transportation are best seen from up here.  Iceland still has an excellent road system, IMHO (they complain about it a lot nonetheless  ;)  ).  But the days of tunnels through the mountains to little fishing villages are pretty much at an end.  A lot of the big construction projects remaining are just left-overs from the boom days.  For example (unrelated to transportation), Harpa was finished with government money when the collapse left it a skeleton rusting away at the docks.

                Anyway, name a department, I'll show you the cuts in it.

                •  Are you saying the International Misery Fund (0+ / 0-)

                  should not have lent the country any money at all?

                  What is the cost of tuition for tertiary education (university/trade school)?
                  What does healthcare cost? Dental care?
                  Was there any mortgage forgiveness?

                  BTW, in Canada we have had tremendous cuts in all the social welfare programs in the last 2-3 years and we didn't suffer a meltdown (our banks were mostly isolated due to regulation). Cuts everywhere - hospitals, schools, transportation, roads.

                  •  Not at all. (1+ / 0-)
                    Recommended by:
                    Claudius Bombarnac

                    I'm not at all saying that Iceland did the wrong thing. I'm saying that what they did is not what you and others here are portraying it as.

                    I had dinner with a couple Icelanders tonight and told them about our conversation and the similar conversations I keep having to have at this site from people who don't believe what's happened over here, and keep wanting to focus  on their fictional image of Iceland.  I got a lot of frustrated head-shaking when I mentioned the Daily Kos disbelief about the huge budget cuts.  

                    Iceland will recover.  Not to its previous highs, but to a good level, and be all the stronger for it.  But it's a hard road for the country to walk.

    •  Jane Jacobs is great! "Eyes on the Street" (1+ / 0-)
      Recommended by:
      4Freedom

      is such profound wisdom... [read more]

      And the Occupy movement is bringing dozens and dozens of eyes to streets that need more witnessing!

  •  And more (4+ / 0-)
    Recommended by:
    marsanges, Dauphin, Deep Texan, aufklaerer

    doom that will not materialize.

    When all is clear and done this crisis just means two things:
    More euro
    More common planning for euro nations.

    If you have said a year a go that the hard nucleus of the euro could take down Berlusconi, force Italy or Spain or Ireland or Greece or Portugal to take the measures they've taken and will force other countries to take....

    More euro not less and certainly not the laughable idea that the euro is going to disintegrate, that is exactly what has been made very clear this week.

    •  Anything is possible (9+ / 0-)

      They could discover a new, limitless, clean source of energy made from unicorns and children's laughter.

         But I wouldn't bank on it.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Sun Nov 13, 2011 at 02:37:21 PM PST

      [ Parent ]

    •  If European nations were willing (4+ / 0-)

      to surrender the levels of sovereignty required to make the Euro work in bad times, they'd have done it already.

      They didn't.

      They're not going to.

      The Euro as an idea was, and is, fundamentally flawed. Currencies are instruments of governments, which is why there are no private currencies anymore. You can't have one without the other.

      Europe, or any other area, cannot have a common currency without having a common government... which the European parliament is not. And not because it is insufficiently representative or democratic, although it is both of those things, but because it is insufficiently powerful.

      --Shannon

      "It is better to die on your feet than to live on your knees." -- Emiliano Zapata Salazar
      "Dissent is patriotic. Blind obedience is treason." --me

      by Leftie Gunner on Sun Nov 13, 2011 at 07:24:51 PM PST

      [ Parent ]

      •  Well (3+ / 0-)
        Recommended by:
        Euroliberal, Deep Texan, aufklaerer

        All the measures, stupidly slowly, taken up to now point to reinforcement of a central economic policy and more euro.

      •  Don't agree with your premise... (1+ / 0-)
        Recommended by:
        gjohnsit

        It's easy when things are going alright to say: "There's no need to give up sovereignty.  Nothing bad is going to happen."

        It's only when the shit hits the fan that extreme, and somewhat unpalatable, measures are given consideration.  So, it's very possible this crisis could be the catalyst that causes the Eurozone to more fully integrate.  

        However, it will be extremely difficult to get there.  And what's more, the EZ still has to survive the short and medium term, and if Italy gets in more trouble, then it may not do so.  

  •  lolz (6+ / 0-)
    The person nominated for Prime Minister of Italy is Mario Monti. Get this - he's an economic advisor for Goldman Sachs. The vampire squid itself.
       And the guy who recently took over the ECB, Mario Draghi, is also a former executive of Goldman Sachs.
       The vampire squid, long in control of the Treasury Department, is now taking over the world.

    Too funny, and Goldman Sachs were the ones who made all kinds of dodgy loans to Greece in the first place. No wonder Obama was grinning like a cat eating cactus at the last G20 meeting he knows that in this zero sum game, he has a little more in the way of cards than his competitors across the pond. Tory mumbling over here has it that the "special relationship" is over and the US is allying itself with the Asian countries and cutting Europe and the UK loose. We'll see if that pans out.

    "Bootstraps are a fine invention as long as they are attached to boots." blueoasis

    by northsylvania on Sun Nov 13, 2011 at 02:01:02 PM PST

    •  What next.... (0+ / 0-)

      Goldman Sachs causes ring around the collar?

      Get real, blame them for a lot of things, the Euro crisis is not one of them.

      The left just loses credibility when it goes on these mindless rants...

      •  Maybe not totally, (2+ / 0-)
        Recommended by:
        gjohnsit, tardis10

        but I wouldn't put it past them to throw a drowning man an anvil.

        "Bootstraps are a fine invention as long as they are attached to boots." blueoasis

        by northsylvania on Sun Nov 13, 2011 at 02:30:57 PM PST

        [ Parent ]

      •  Goldman Sachs: the root of all evil? (13+ / 0-)

        Yeh, it's easy to get carried away with hating Goldman Sachs, but then it's so darn easy.

        For instance from over a year ago:

         Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.
        I guess we found out when that "point" was.

          And there is this from 6 months ago:

         while Goldman Sachs was helping Greece hide its debt from the official statistics, it was also hedging its bets through buying insurance on Greek debt as well as using other derivatives trades to protect itself against a potential Greek default on its debt. So while Goldman Sachs engaged in long-term trades with Greek debt (meaning Greece would owe Goldman Sachs a great deal down the line), the firm simultaneously was betting against Greek debt in the short-term, profiting from the Greek debt crisis that it helped create.[Business Insider]
         And then, finally, there is this
         The European officials are looking at whether banks, including Barclays and Goldman Sachs, have harmed rival organizations that could compete in markets for providing information and clearing a form of transaction that had become critical to the smooth functioning of the entire economy.

        "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

        by gjohnsit on Sun Nov 13, 2011 at 02:51:42 PM PST

        [ Parent ]

        •  Sure... (0+ / 0-)

          ..we know they have done some evil shit...

          But they are not the cause of this mess, they have only tried to profit from it, that is what they do...

          Like a piranha, they just consume what is around them...

        •  bingo! (8+ / 0-)

          I read the very same thing as your second blockquote.  We need to view this as a pattern of behavior.  The banking industry is a criminal enterprise.  It is much akin to the Mafia being in the protection business.  It starts off as the banks selling protection but ends up worse than what the buyer seeking protection was trying to protect against.

          I am beginning to believe that behind every financial crisis in the world today, there are big banks pulling the strings. Regardless of the final outcome, they win.  In fact, they prefer to win on their hedges.

          The United States is not just losing its capacity to do great things. It's losing its soul.--Bob Herbert. gulfgal98's corollary- We are fighting back to save our soul. Thank you, #OWS for empowering us all.

          by gulfgal98 on Sun Nov 13, 2011 at 04:15:46 PM PST

          [ Parent ]

          •  At the same time, (1+ / 0-)
            Recommended by:
            Ignacio Magaloni

            the Greek government chose to hide its debt, and GS's trades paradoxically brought some transparency to what Greece was doing.  There are no good people here, not even ordinary Greeks who lived beyond their means for years.  Banks should eat losses, but if they do, they'll just make them back by charging higher interest rates.  Find some deal that makes everyone a little bit unhappy, some haircuts etsc, but any austerity should be borne more by the Greek elites thru higher taxes.  Macroecon is agnostic on that question, but the goals arent just macroeconomic -- and for that, not just the swaps, the banks deserve blame.

            "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

            by Loge on Sun Nov 13, 2011 at 04:39:45 PM PST

            [ Parent ]

            •  Hrmm. (2+ / 0-)
              Recommended by:
              gjohnsit, tardis10
              There are no good people here, not even ordinary Greeks who lived beyond their means for years.

              If each country were suffering according to individual debt to income ratio, Americans and the even more profligate Australians should be rioting in the streets by now. Of course they might be after their populations are told that their private pensions have taken a permanent hit, as they have recently in the UK when government bond prices went up and interest tanked. There are plenty of American companies whose pension obligations outweigh their profitability.
              Then there is Social Security is a bunch of worthless paper, as Bush II so famously said. When the banks say Americans have been living above their means and the pensions will be the first to go, then what?

              "Bootstraps are a fine invention as long as they are attached to boots." blueoasis

              by northsylvania on Mon Nov 14, 2011 at 12:02:41 AM PST

              [ Parent ]

  •  I disagree (7+ / 0-)

    It is a political problem. The ECB is not willing to say no to speculative attacks against Italy. All they would need to do is play a role similar to the FEDs in the US and Italy's interest rates would stay low. What we see is the utter failure of the political Europe to support all its members. I am ashamed.

    Greece is a different story because it is bankrupt. Not Italy and Spain - they had surpluses. And now the austerity will throw them into a recession. Stupid really. Europe's political leadership, particularly Germany and the ECB are irresponsible. Europe needs to act as One Nation. With one Central Bank that fights off any speculative attack.

    •  Nominally... (2+ / 0-)
      Recommended by:
      tari, gjohnsit

      the ECB doesn't have the authority to backstop the Euro to fight speculative attacks. It is a pretty major political problem.

      •  this is why the Euro will fail (2+ / 0-)
        Recommended by:
        randomfacts, marsanges

        You cannot have a common currency with a strong central bank. I really miss Helmut Kohl and Joschka Fischer. They would have understood what it takes to make Europe strong. Schaeuble and Merkel are a complete disaster.

        •  I wanted to say (4+ / 0-)
          Recommended by:
          eyesoars, Loge, Iberian, randomfacts

          you cannot have a common currency without a strong central bank. Simply not possible. Otherwise your currency is only made for the good times, which is an illusion.

          •  Exactly. This is the heart of the matter. (1+ / 0-)
            Recommended by:
            tari

            The problem is not debt, or even the euro per se, the problem is the particular institutional and political arrangements currently as they are in Europe, the failure of politicians from different countries to resolve their differences.

            "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

            by randomfacts on Sun Nov 13, 2011 at 09:49:00 PM PST

            [ Parent ]

          •  Ok - Merkel wants "more not less Europe" (1+ / 0-)
            Recommended by:
            gjohnsit

            and warns that Germans have to be prepared for a deeper political integration. I do like that kind of talk !!!

            http://www.nytimes.com/...

            "“It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union,” she said."

            sounds good but then this

            "But Mrs. Merkel reiterated her opposition to euro bonds or other methods of collectivizing the debts of the 17 European Union countries in the currency bloc."

            this is not going to work without issuing bonds and collectivizing debts

            •  It's not clear to me Eurobonds will work anymore (1+ / 0-)
              Recommended by:
              gjohnsit

              The problem is all of the countries are either moving toward being either in the crisis camp, or the safe camp.  Germany is decidedly in the safe camp.  However, most of the other countries are trending away towards crisis.  Even France's yields are now going up.  

              Germany can't backstop all of the Eurozone by itself if France goes moves toward crisis, and the other "safe" countries are all tiny, so it really comes down to just Germany in that case.  

      •  actually (1+ / 0-)
        Recommended by:
        gjohnsit

        it has all the authority needed. This was debated extensively in Europe.
        It's the TINA people that are spreading this false information.

  •  Wow, the bankers didn't just buy the world... (17+ / 0-)

    ...and crash it, they're taking it over. Wealth extraction taken to it's logical and extreme conclusion.

    Regulated capital serves the people, unregulated capital serves itself.

    by Alumbrados on Sun Nov 13, 2011 at 02:11:41 PM PST

  •  It's the birth of a new species: (17+ / 0-)

    Medici Ubercarnivorae....

    I count even the single grain of sand to be a higher life-form than the likes of Sarah Palin and her odious ilk.

    by Liberal Panzer on Sun Nov 13, 2011 at 02:13:50 PM PST

  •  as the vampire squid gains more control (9+ / 0-)

    I wonder if that will hasten, or delay, the inevitable fall of the ponzi scheme.

    "We can't solve problems by using the same kind of thinking we used when we created them." - Albert Einstein

    by pickandshovel on Sun Nov 13, 2011 at 02:20:16 PM PST

  •  Excellent diary (5+ / 0-)

    I would send this to my mom, but she is freaking out about her portfolio, as well she should.

    Blaming the victims, though, which she should not.

    Let me issue and control a nation's money and I care not who writes the laws." ~ Mayer Amschel Rothschild, 1790

    by ozsea1 on Sun Nov 13, 2011 at 02:30:13 PM PST

  •  Speculation / market manipulation (8+ / 0-)

    Surely part of what is driving Italy to desperation is deliberate financial market manipulation.  

    Otherwise, why did the vultures seemingly wait for a pause in the Greek debacle?

    2010: An Unforced Error Odyssey

    by Minerva on Sun Nov 13, 2011 at 02:32:34 PM PST

  •  I think Krugman's book (7+ / 0-)

    "The Return of Depression Economics" tells about the Latin American financial crises and it does sound like the same story.

    I only believe in karma when it comes to tipping.

    by cjenk415 on Sun Nov 13, 2011 at 03:08:00 PM PST

  •  It's war (10+ / 0-)

    Banks or people. Only one will survive.

    A man, a plan, a canal, Panama

    by Karl Rover on Sun Nov 13, 2011 at 03:44:07 PM PST

  •  I don't see how kicking Greece, Italy or any.... (4+ / 0-)

    ...of the other indebted nations out of the Euro monetary union can resolve the debt issue.

    Paying off their Eurodollar denominated debt with new issues of the drachma/lira or whatever might not be a dejure default, but it is certainly a defacto default. The only reason why they could "pay" the debts with restored sovereign currencies is precisely because the payments in drachma/lira would be worth less than what the debt is worth in Euros.

    So the effects on lenders would be the same as defacto default and the dominoes would continue to destabilize.

    While I don't hold Obama in high esteem, that doesn't mean I would say he's the Devil Incarnate and the lessor of evils. He is merely the lessee of evils.

    by xynz on Sun Nov 13, 2011 at 03:56:49 PM PST

    •  That's a good question (7+ / 0-)

      For reference, I offer the example of Argentina.
         With a neoliberal government, they did everything the IMF told them to do. They borrowed from abroad and privatized everything, while fixing their currency to an external source.
         Much like what souther Europe has done.

       Eventually they couldn't meet their debt payments. So they grabbed the retirement savings of their citizens (like several European countries have done) in order to satisfy foreign bankers. This still didn't solve the problem.
         Eventually, after impoverishing the citizens of their nation, they defaulted on 70% of their debts anyway. Because there never was an alternative.

        It wiped out their economy and the savings of their people.
      But it also wiped the slate clean.

        Their economy has grown virtually uninterrupted ever since.

      You'll find a similar example with Iceland.

        As for the Euro, the speculative attacks, like the one currently against Italy, would stop as soon as it was obvious that the situation had stabilized.
         Germany is not going to default. Neither is Finland, Netherlands, and others. But there ARE countries that will default, and that ripples through the Eurozone.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Sun Nov 13, 2011 at 04:39:42 PM PST

      [ Parent ]

      •  Argentina has resources, though (1+ / 0-)
        Recommended by:
        Ignacio Magaloni

        it's always going to be worth some investor taking a flier on.  Italy has to worry about its microeconomic problems, not just macro ones.  Both countries also practice crony capitalism, but the IMF advocates that too, by other names.

        Question: does Italy stay unified?  A defaukt may make the north/south split intolerable.

        "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

        by Loge on Sun Nov 13, 2011 at 04:48:50 PM PST

        [ Parent ]

      •  Those are all good points, but they don't.... (1+ / 0-)
        Recommended by:
        Deep Texan

        ....address the central issue: having fiscally weak nations leave the monetary union won't solve the debt crisis. Furthermore: by paying off their debts in newly issued sovereign fiat currencies, they'll weaken their creditors and cause further systemic instability.

        While I don't hold Obama in high esteem, that doesn't mean I would say he's the Devil Incarnate and the lessor of evils. He is merely the lessee of evils.

        by xynz on Sun Nov 13, 2011 at 06:25:04 PM PST

        [ Parent ]

      •  You are confused. (1+ / 0-)
        Recommended by:
        Deep Texan

        Iceland took part in the IMF program, and followed it to the T -- so well that the IMF is now pulling out of Iceland, satisfied that their program is on track.  So if you want to use them as an example of "success", then you're claiming that the IMF was successful in Iceland.

        •  Iceland was an atypical case for the IMF (2+ / 0-)
          Recommended by:
          Floande, gjohnsit

          Iceland was probably the best outcome it has ever had in it's entire history.

          Here's a report from the IMF itself.

          Iceland's Unorthodox Policies Suggest Alternative Way Out of Crisis

          Lessons for the IMF

          What, then, should the IMF take away from its cooperation with Iceland? The Fund learned three main lessons, Shafik said.

          •When countries have a clear strategy in mind, as was the case in Iceland, it becomes much easier for the IMF to engage and provide policy support and advice.

          •There are clear advantages to having a heterodox toolkit―more tools are better than fewer.

          •Iceland set an example by managing to preserve, and even strengthen, its welfare state during the crisis.

          Recent IMF research has shown that countries tend to grow faster and more consistently when income distribution is more equitable, so the Fund is now paying much more attention to these issues in its programs, she said.


        •  I've heard differently (2+ / 0-)
          Recommended by:
          katiec, Claudius Bombarnac

          For instance, Iceland actually DID default. Which, I am sure, was NOT part of the IMF plan. That much I am certain of.

           Perhaps you could comment on this video:

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Mon Nov 14, 2011 at 04:53:14 AM PST

          [ Parent ]

          •  Thanks for the vid... everyone should watch. n/t (1+ / 0-)
            Recommended by:
            Claudius Bombarnac
          •  Iceland did not default. (0+ / 0-)

            And I'm writing this from Reykjavík, so if you want a second opinion, all I need to do is walk about a few meters  ;)  Trust me, I read the Icelandic news daily.  Or heck, don't trust me -- trust an English-language Icelandic newspaper.  I could offer you tons of Icelandic-language ones if you'd rather.

            Why do I need to comment on a YouTube video, exactly?

            •  Technically, Iceland did not default. But (1+ / 0-)
              Recommended by:
              gjohnsit

              they are still not paying. They say the bank will repay the debt.

              http://www.icenews.is/...

              ESA: Iceland is responsible for Icesave refund
              10 June 2011

              The EFTA surveillance authority, the ESA, has ruled that the Icelandic authorities are required to pay out the minimum insurance amount on Icesave deposits in the UK and Netherlands.

              The ESA ruling came in the form of a 24 page document sent to the Icelandic government today.
              ...
              After two Icesave repayment deals were toppled in public referendums, Iceland’s official position is that the bankrupt estate of Landsbanki bank should pay the British and Dutch back — something it now appears the bank will be able to do in full.

              The ESA document states that if the Icelandic government does not pay up, the organisation will take the case to the EFTA court. The Icelandic government publicly stated at the time of the last referendum that the case would probably go to court and the country’s finance minister said he would like it to happen as soon as possible.

              If Landsbanki is able to fully pay up, the EFTA court case would purely be about whether or not the Icelandic government should pay interest for the time Britain and Holland spent waiting.

          •  I made myself sit through this video. (0+ / 0-)

            He tries to make the mundane sound incredible and overplays everything.  For example, the "Occupy Reykjavík" movement he's talking about is just a couple tents.  I could get you a picture of them tomorrow when you want (sadly, not during daylight hours -- they're too short this time of year, and I'm busy during the day).   This guy doesn't even get his basic facts right.  800,000 people in Iceland?  There've only been about 1,000,000 people in all of Iceland's history, added up.  There's currently 320k people in the country.

      •  Everyone commenting on Iceland.... (1+ / 0-)
        Recommended by:
        gjohnsit

        needs an update:

        They DID take an IMF loan....  and the Democratic Socialist Party has decided to become the Socialist Fascists and want the people to pay up --  which is why there are now protests.

        The banksters are NOT gone, they're back.

  •  This is a very important diary (13+ / 0-)

    This is probably the most important diary I have read in some time.  What had been unthinkable in the past is happening.  The banks are now taking over sovereign nations one by one.

    Tipped, recommended, and hot listed.

    The United States is not just losing its capacity to do great things. It's losing its soul.--Bob Herbert. gulfgal98's corollary- We are fighting back to save our soul. Thank you, #OWS for empowering us all.

    by gulfgal98 on Sun Nov 13, 2011 at 03:57:15 PM PST

  •  republished to The Royal Manticoran Rangers (0+ / 0-)

    naturally.

    Let me issue and control a nation's money and I care not who writes the laws." ~ Mayer Amschel Rothschild, 1790

    by ozsea1 on Sun Nov 13, 2011 at 04:05:08 PM PST

  •  My husband and I are going to Paris for (3+ / 0-)

    Thanksgiving next week. How is this going to affect us financially there? Is there anything we should be aware about?

    I work with B2B PAC, and all views and opinions in this account are my own.

    by slinkerwink on Sun Nov 13, 2011 at 04:48:15 PM PST

  •  Nationalization of banks? How quaint. (11+ / 0-)

    Why would the banks allow themselves to be run by one of their assets?

    Regards,
    Corporate Dog

    -----
    We didn't elect Obama to be an expedient president. We elected him to be a great one. -- Eugene Robinson

    by Corporate Dog on Sun Nov 13, 2011 at 04:56:09 PM PST

  •  Goldman Sachs and Plunders (3+ / 0-)
    Recommended by:
    gjohnsit, 3goldens, Situational Lefty

    wouldn't be the first time for Rome, or the Empire.  It's just that this time the barbarians are wearing Armani and driving BMWs.

    If you're not careful, the newspapers will have you hating the people who are being oppressed, and loving the people who are doing the oppressing. ~Malcolm X

    by ActivistGuy on Sun Nov 13, 2011 at 05:02:55 PM PST

  •  Scenario 4 is as I alluded to in a comment in (1+ / 0-)
    Recommended by:
    ChadmanFL

    Open Thread the one financially secure European Country "Potemkin" Russia whose leaders are still USSR behind Closed Doors is about to get what it's wanted since 1945 the conquest of The West,just wait if The EU breaks it's the start of a New European War and Russia is the only one that can win.

  •  "And the same banks that Europe's citizens ... (13+ / 0-)

    ... are sacrificing to save are the ones now responsible for this situation."

    Where have we heard that before?

    Another zinger diary, gjohnsit.

    The surest way to predict the future is to invent it. — Stephen Post. [Me at Twitter.]

    by Meteor Blades on Sun Nov 13, 2011 at 05:30:30 PM PST

  •  Vampire squids... (3+ / 0-)
    Recommended by:
    Betty Pinson, zaka1, gjohnsit

    and yet squids are so much better than these banksters. Squids have black ink. These guys are profiting off of red ink (and the lifeblood of nations).

    Just because it's made up doesn't mean it isn't true.—Plan 10 from Outer Space

    by mofembot on Sun Nov 13, 2011 at 07:41:53 PM PST

  •  In the interim (3+ / 0-)

    Volatility in the markets makes traders and speculators smile. Especially those who can front-run the latest casino rumor.

    May the poetry of your life never be beaten into mere prose.

    by Anthony Page aka SecondComing on Sun Nov 13, 2011 at 08:05:46 PM PST

  •  What are the chances of ECB changing course? (2+ / 0-)
    Recommended by:
    randomfacts, gjohnsit

    Excellent diary as always.

    I keep hearing that the ECB could end the crisis instantly if it decides to print more euros / behaves as the lender (bail-out-er) of last resort / allows slightly more inflation / ...  

    Yes, there are some pesky treaties in the way, but if the Germans want it done, there are apparently ways to make it happen quickly. Plus, I've heard that they can even make it official thru the euro member states' legislatures pretty quickly in the midst of an existential crisis if they want (as demonstrated in Greece & Italy).

    Why are the Germans resisting a looser monetary policy to end the crisis? What would need to happen to convince the Germans to change the ECB course? What are the chances that they will loosen up the money supply before a euro breakup?

    What's the downside for Germany & its banks of the ECB printing a couple of trillion extra euros to get through the crisis? The Greek debt is worthless already but the Italian/Spanish debt is still good & in unnecessary jeopardy, isn't it? Is the inflation impact really worse than the current crisis/default/breakup scenario?

    Would love your thoughts on this - maybe even a full diary if you're so inclined - to understand what's standing in the way of a eureka moment amongst the German power brokers / bankers. I've heard about ww1 memories, racial attitudes about laziness in the south, etc, but i haven't read an explanation that truly follows the money & explains the true logjam & what could clear up that logjam.

    Thanks again!

    •  If the ECB became the Fed-light (2+ / 0-)
      Recommended by:
      SneakySnu, 888

      It would certainly change things. It would calm the markets a great deal.
         However, it wouldn't change the fact that Greece is broke. Greece would still default at the end of the day.
        What it would do is kick the can much further down the road, and that is all the markets are looking for.

        One thing is that this is against the rules of the Euro. To make that change requires every, single country to agree. Several of them (I'm thinking of Finland) are not incline to agree to the ECB becoming much bigger.
        As for Germany, the German Supreme Court has ruled that the treaty can't be changed without a vote from the German people. The German people are unlikely to approve it.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 05:00:06 AM PST

      [ Parent ]

      •  Thanks. I agree that Greece is broke. But (1+ / 0-)
        Recommended by:
        gjohnsit

        Greece alone won't break the euro. The real test is in the larger countries: Italy, Spain, & France. There, the ECB is already using "loopholes" to buy Italian bonds, albeit half-heartedly. Couldn't they just turbo-charge the current bond purchase policy & make it clear that they will fully back the bond sales of Italy, Spain, etc. at "sustainable" rates - say 5% - and end all the drama without ever calling it a "bailout" and thereby eliminating the need to change the treaties?

        The fact that they're not using their existing tools to the max makes me suspect that someone influential (maybe a Deutsche Bank, or maybe some politically-connected investor in Germany/France) is making a lot of money (or avoiding losing a lot of money) from the drama and is literally holding up the ECB's actions until the very last possible moment, to make the maximum possible profit in the interim.

        I admit it sounds a bit like a conspiracy theory, but it feels quite plausible after the manufactured/fake debt ceiling crisis in the US earlier this year. That's why I think we need to follow the money to understand who's behind it & why. Somehow I doubt it's the Finns.

        •  One place to start would be the CDS insurers on (1+ / 0-)
          Recommended by:
          gjohnsit

          Greek bonds...they sure got a sweet deal, negotiated personally by Merkel & Sarkozy, so they wouldn't have to payout billions. I'd certainly like to know exactly who they are & how much each of then benefited from the 'voluntary' haircuts hand delivered by Merkozy. They'd be at the top of my suspect list on why Merkel hasn't given the ECB the green light on a forceful bond purchase program to end the crisis.

  •  Yet another doom and gloom diary by this diarist (3+ / 0-)
    Recommended by:
    randomfacts, theano, gerald 1969

    Yes. "the Euro as it currently exists if finished."

    If finished.

    I'm sure that makes sense to someone.

    I'm not prone to chicken little pronouncements.  If the coming weeks prove me wrong, all credit is due.

    I don't, however, believe it will be.

    There is a particular personality that seems drawn to these doomsday predictions.

    I'm not one of them.

    •  Well sure, (0+ / 0-)

      except this time it's not just this diarist. The front page of the New York Times is pretty much saying the same thing.  I agree with you that this diarist tends to have certain doomsday tendencies. Yet in this particular diary he is more restrained than I thought.

      "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

      by randomfacts on Sun Nov 13, 2011 at 09:26:07 PM PST

      [ Parent ]

      •  If someone doesn't want to hear it (1+ / 0-)
        Recommended by:
        randomfacts

        they aren't going to.
           I've been making a consistent call on the Euro since Greek bonds started blowing up in early 2010.

          I'm sure if I checked my old diaries that someone was commenting that Europe would never let Greece default.
          Now they have defaulted, something that the Euro treaty doesn't even allow for.

          I'm curious how my critics will take into account doomsday predictions from the front page of the NYT?

          As a certified doomday'er, I still didn't expect Italian bonds to blow up. At least not until Portugal defaulted (which will happen).

        "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

        by gjohnsit on Mon Nov 14, 2011 at 05:07:15 AM PST

        [ Parent ]

        •  What's Your Track Record? (0+ / 0-)

          It's been over 3 years since the global financial system hit the iceberg. A lot of specific things have happened. What have you specifically predicted? Which have been right, which have been wrong? Links please.

          "When the going gets weird, the weird turn pro." - HST

          by DocGonzo on Mon Nov 14, 2011 at 06:39:49 AM PST

          [ Parent ]

          •  Track Record (4+ / 0-)

            Honestly, it's mixed.

            I'm not going to go through all my old diaries. I'm just going to be honest.

            My biggest missed call was the size of the market recovery from 2009. I thought it was statistical noise until it was well on its way. NewDealDemocrat can attest to that.
               I recently made a bad call in which I thought Q3 was going to be a recessionary quarter. It wasn't.

             On some other calls I was only half right. I predicted in 2010 that the housing market hadn't bottomed and was about to take another steep downturn. The reality was that the housing market has instead continued a slow meltdown instead of a steep drop.
               While I missed the market recovery in 2009, I did correctly (and repeatedly) point out that it was lopsided for the wealthy before the financial media began reporting it.

            However, I've also made some very good calls:
            I was predicting a housing bubble crash as early as 2005.
            I started warning people about mortgage-backed securities in 2006.
            I was suggesting people buy gold as early as 2005.
            I spotted the credit crunch in 2007 as soon as it happened.
            I spent the entire year in 2008 telling people that a crash was going to happen (although even I underestimated the extent of it).
            I said that the financial reforms in 2009 didn't go nearly far enough, and that Obama was too close to Wall Street.
            I spotted the dangers to the Euro the moment that Greece got into trouble.

            I haven't done much predicting this year because I've been a little busy.

              So my track record is far from perfect, but its far better than what you will get out of the financial media.
               More importantly, several people here have thanked me for warning them about various financial dangers, and that I had saved them a lot of money.
               And that's my motivation for posting here: because I want progressives to have the money when this is over, not the conservatives.

            "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

            by gjohnsit on Mon Nov 14, 2011 at 07:10:33 AM PST

            [ Parent ]

            •  You don't need to defend yourself (2+ / 0-)
              Recommended by:
              gjohnsit, oldhippie

              so vigorously.  Reality will do that in time.  The basic issue is that grossly indebted Western democracies are trying to save reckless and insolvent private banks by adding more debt, with the expectation that future economic growth will pay for the rescue.  There are not enough energy resources in the world for that to possibly happen.

              Somebody is going to pay dearly for these bank losses, and our leaders already have decided who that will be.  The cost will be democracy.  Your concluding reference to Latin America is correct.  We've seen this all before:  IMF conditionality, government by "technocrat" economists, disgusting levels of income inequality.  It takes a dictatorship to enforce it.

              A terrible beauty is born. --W.B. Yeats

              by eightlivesleft on Mon Nov 14, 2011 at 10:21:02 AM PST

              [ Parent ]

    •  I'm curious (0+ / 0-)

      If it's just me, and not anyone else, then explain this.

       "Europe is in one of its toughest, perhaps the toughest hour since World War Two," Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.
       Or are you saying that Merkel is a doom-and-gloomer too?

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 06:12:10 AM PST

      [ Parent ]

  •  I hope people here READ this (3+ / 0-)

    whether they understand it or not, because the bottom line facts should be clearly understandable:

    The Euro as we know it, is doomed, and will either be restructured to include fewer countries, or cease to exist, as the continent's countries go back to their old currencies.  

    The problem is dealing with the unwinding of the TRILLIONS of Euros woven into the very fabric of Europe.  It will very likely lead to runs on the banks in the weaker countries, as people try to "rescue" their savings and not be handed "worthless" paper money in exchange for notes that now actually BUY stuff, and because ALL our banks are connected, the contemporaneous collapse of the world's banking system (or nationalizing of it) seems inevitable.  

    Inevitable.  

    You will want to have your "wealth" somewhere you can get access to it someplace other than a bank, unless it is insured by a country able to bail you out.

    •  The dollar will benefit (0+ / 0-)

      at least in the short-term.
         Having money in cash will be the way to go for a while.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 05:08:43 AM PST

      [ Parent ]

  •  Excellent diary (6+ / 0-)

    what concerns me is that this seems to be a little more than just a credit crisis, it is also a political crisis especially whereas in the case of Greece a Prime Minister whom also happens to be, I believe, a previous banker is put into office without an election.  Is this also becoming the new political system where leaders will no longer be elected, but put into place in order to carry out austerity for the bankers?  I see democracy getting twisted and the people taken over by austerity lords.  

    I do not believe that Greece will accept this new leader and the more severe austerity measures being put upon them.  The Greek people seem to be at a breaking point and since 2008 the riots have been growing ever stronger, larger, and more violent.

    I shouldn't say this, but it does concern me that Germany seems to be gaining so much power in the financial systems of Europe and able to dictate governmental policies in what once was sovereign countries.  Never in history has ended well when countries group together in an alliance against other countries especially when that country is weaken by crisis.

    "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

    by zaka1 on Sun Nov 13, 2011 at 09:13:29 PM PST

    •  Not only Greece, but Italy as well (2+ / 0-)
      Recommended by:
      zaka1, gjohnsit

      Mario Monti (ex Goldman Sachs) is to take over in Italy.

      BTW, both men were involved in liberalising and deregulating markets as well as engaging in the credit swap transactions (mainly with Goldman Sachs) that allowed both countries to hide debt and deficits off the books.

      •  Did Italy's (2+ / 0-)
        Recommended by:
        Claudius Bombarnac, gerald 1969

        leader resign yet?  Funny how they have someone from Goldman Sachs already lined up, where is the election?  France and Germany seemed to collude against Italy and I believe now France is in financial trouble as well.  

        It all seems so fishy and corrupt.  But, I think we've see things happening in this country as well and it can't be defined as democracy.  Greece was the cradle of democracy.  What is of some concern, to me at least, is seeing how this is unfolding and how Goldman Sachs is so involved in almost every countries' demise and yet they have still not be held accountable by anyone.

        In every country the people are being left behind and it seems we have a whole new system of governments developing which has the appearance of a business monarchy.  When and if this all falls apart then the elite classes will begin to fight with one another for power.
         

        "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

        by zaka1 on Sun Nov 13, 2011 at 09:57:53 PM PST

        [ Parent ]

        •  Yup, he's gone (2+ / 0-)
          Recommended by:
          zaka1, gjohnsit

          Goldman Sachs will now add Italy to its portfolio of nations for which it has assumed management responsibilities.

          •  And they (2+ / 0-)
            Recommended by:
            bewild, gjohnsit

            will squeeze every last penny out of the people via pensions, social safety nets, etc., and probably leave the people impoverished with a tyrannical system put in place to punish the people for having basic needs while the bankers buy their tenth villa.

            "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

            by zaka1 on Sun Nov 13, 2011 at 11:57:33 PM PST

            [ Parent ]

        •  "Super" Mario took over Sunday. (2+ / 0-)
          Recommended by:
          zaka1, Floande

          Berlusconi has resigned.

          The western nations are now run by a Corporate Oligarchy -  this includes the US, UK and almost all of Europe.

          Goldman Sachs is so involved in almost every countries' demise and yet they have still not be held accountable by anyone

          •  This is not (2+ / 0-)
            Recommended by:
            Claudius Bombarnac, gjohnsit

            going to end well for anyone in the 99% here or in Europe.  Greece is not the only place with riots.  I saw this clip from the BBC News when it first aired, it is enough to give anyone nightmares.  It reminds of the tale of Snow White, except this guy is the evil witch asking the mirror, "who is the fairest of all?"  I can't stand arrogance anymore, I'm getting too old and it makes me want to send these kind of people to their rooms to not come out until their behavior improves.  

            "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

            by zaka1 on Mon Nov 14, 2011 at 12:02:46 AM PST

            [ Parent ]

            •  I can see things getting further out of hand (2+ / 0-)
              Recommended by:
              zaka1, gjohnsit

              especially if the global economy continues to worsen over the winter.

              We may be in for a "Global Spring" next year.

              •  I agree with you and (2+ / 0-)
                Recommended by:
                gjohnsit, Claudius Bombarnac

                was thinking the same thing today even before reading this diary.  What bothers me is that the people have been speaking out all over the globe and with OWS and the leaders of this country and elsewhere don't seem to acknowledge that there is a problem with the entire global economic system.  They just keep forging ahead doing the same things that led us down this path.  I could be wrong, but that is how it seems, that the leaders are just indifferent to the people.  

                The way people are being demeaned and put down even by some in office and others running for office it is like a complete turn around of what government use to represented just 35 years ago.  Since Regan, and I think he was just the beginning, our whole stability from the housing market to social services to our working lives have been completely destabilized and up rooted.

                There are just too many people that have very little means to make their lives more stable and sustain themselves and the jobs they are talking about creating are just that "jobs," but they are not enough to be able to obtain a home, afford healthcare, and provide a living for a family.  Things are so messed up, of course that is when we do turn to our government and ask why things are so out of balance.  

                I wonder too if we will have a global spring next year.  I mean when you look at Greece I don't see how the austerity measures are going to make things better and the ecomony grow there and it is the same every where.  The whole system is constipated.

                "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

                by zaka1 on Mon Nov 14, 2011 at 01:57:31 AM PST

                [ Parent ]

                •  Because the problems are global, (2+ / 0-)
                  Recommended by:
                  zaka1, gjohnsit

                  the solution needs to be global.

                  People in countries in South America have been "occupying" for 4 or more decades but were mostly ignored by us in the richer nations. We were the 1% back then. We became richer and richer feeding off their resources

                  But the corporations have became multinational and global in scope. They are so wealthy and powerful now, they are like sovereign entities and no longer fly any flag. In their insatiable greed for more and more wealth (the cornerstone of corporate capitalism) they have started to feed on their own.

                  •  Yes, (1+ / 0-)
                    Recommended by:
                    Claudius Bombarnac

                    your correct.  It started in South America, are you familiar with the book "Nunca Ma's?"  It is the Report of the Argentine National Commission on the Disappeared.  It is unbelievable what has been done to people for their resources.  I volunteered as a therapist for Kovler Center and that book was required reading for my work.  People just do not understand some of the tyranny that has been done.  I also think Naomi Klein more recently has brought this to light in her book "Disaster Capitalism."  When I read Klein's book I realized I was already familiar with some of the information.  I think this is why I have such an unsettling feeling about what is going on with the global financial and political systems.

                    I'm not sure what a global solution would be like, do you think that countries should practice more isolation and protectionism?  The bigger and more global a corporation gets the less rules and regulations a country can enforce on them and that seems to be part of the danger to the people/workers.  Or should we all be blended together?  The globalization seems to be causing a great deal of destabilization and concentration of power and wealth at the top.  

                    "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

                    by zaka1 on Mon Nov 14, 2011 at 11:30:53 AM PST

                    [ Parent ]

          •  You would have thought (1+ / 0-)
            Recommended by:
            gjohnsit

            that the era of exulting economists ended in 2008.  We just can't learn.  It's like the ancient Mesoamerican civilizations who thought the solution to their problems lay in sacrificing more and more people.

            A terrible beauty is born. --W.B. Yeats

            by eightlivesleft on Mon Nov 14, 2011 at 10:26:14 AM PST

            [ Parent ]

        •  Greece is the cradle of democracy (2+ / 0-)
          Recommended by:
          zaka1, eightlivesleft

          and Italy is the cradle of rule by corrupt bankers (think Medici), as someone else pointed out.

            How ironic that Goldman Sachs is taking over in Italy.

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Mon Nov 14, 2011 at 05:11:28 AM PST

          [ Parent ]

          •  I faintly remember (1+ / 0-)
            Recommended by:
            gjohnsit

            a documentary on the Medici banking family, but I believe they were also an aristocratic ruling family, the House of Medici.  They were known to have commission a number of great artists and I believe in the 1600's Galileo provided tutorial services to some of the family members.  

            But, back to the new aristocratic rulers of the world which seems to be Goldman Sachs.  Goldman Sachs not only is financially able to back up candidates in this country they seems to be getting so large and involved globally with not only banking but politics as well.  What I find so concerning is that the populations of these countries, including ours, are being held as austerity hostages to keep them financially wealthy.

            This seems to be an universal feeling among the populations of the world since many are rising up and protesting the bailouts.  I know there are those that would argue this point, but since 2008 I've been pretty much floored that the tax payers have had to bail out wealthy bankers and while we lost jobs and security they were getting large bonuses.  Some how what happened in 2008 seems to be continuing to happen with no end in sight.  Anything that becomes to big to fail will eventually fail.

            "During times of universal deceit, telling the truth becomes a revolution­ary act. " George Orwell

            by zaka1 on Mon Nov 14, 2011 at 07:25:24 AM PST

            [ Parent ]

    •  Representative democracy (0+ / 0-)

      I'm amazed at the tears some here are placing on Silvio fucking Berlusconi, the paragon of the subversion of democracy from inside by the super-wealthy, having to leave government.

      There is nothing undemocratic happening in Greece or Italy. The leaders do not have parliamentary support and have to leave.  That's how parliamentary democracies work, period. There is an interim leadership elected by parliament, not by fiat or the EU or Spectra, and elections are soon to follow.

      •  By that logic, Berlusconi was not undemocratic (0+ / 0-)

        Berlusconi had parliamentary support, just like their new PM. You rightfully point out that Berlusconi subverted Italian democracy and in the next breath disclaim that a leader from Goldman Sachs is not also a subversion of democracy.

        I'm glad Berlusconi is gone, but banker rule legitimized by parliamentary approval without popular ratification is not a good development for Italy, or democracy in general.

        •  Berlusconi (0+ / 0-)

          won the elections that is hard to contest so my claim is not that he was there undemocratically but that he used his position to erode many democratic principles. He is anyhow going to face justice in several trials.

          Comparing him to the present president is preposterous. Monti also is supported by a large majority in both chambers as around 60% of the population if polls are to be believed. And as I said soon there will be elections.

  •  Has anyone raised the question of capital controls (2+ / 0-)
    Recommended by:
    gjohnsit, synductive99

    ?

    Barry Eichengreen wrote an essay in 2007 saying how the breakup of the euro was impossible because the minute the markets suspected any country was going to leave the euro, there would be a massive run on the banks as people scrambled to get money out of the country, resulting in the instant collapse of that country's financial system.

    It seems to me than that any country that wanted to exit the euro would have to first impose capital controls: a prohibition on taking money out of the country in larger than very small sums, for very particular reasons. In fact, this is essentially what Germany did to help it recover from the Great Depression after it went off the gold standard in 1933.

    "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

    by randomfacts on Sun Nov 13, 2011 at 09:32:00 PM PST

    •  Two things (1+ / 0-)
      Recommended by:
      randomfacts

      First of all, people have been scrambling to get their money out of Greece for some time now.
        I don't have the numbers handy, but something like 1/3 of deposits in Greek banks have vanished since early 2010.

        The other thing is that bank runs are done by institutions now. So it'll look different than you might imagine.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 05:15:38 AM PST

      [ Parent ]

  •  so the bond market locks up for europe (2+ / 0-)
    Recommended by:
    gjohnsit, synductive99

    does that necessarily mean it locks up for businesses here?

    •  Yes (1+ / 0-)
      Recommended by:
      synductive99

      If Italy defaults then the bond market would lock up all over the world. It'll simply stop functioning, much like it did for a few days in 2008.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 05:16:39 AM PST

      [ Parent ]

  •  Our entire economy right now (2+ / 0-)
    Recommended by:
    gjohnsit, zaka1

    is based on an illusion: that this phony and criminal paper wealth can be sustained:

    The entire stock market rally is based on an illusion.
    •  They hollowed out the world economy (2+ / 0-)
      Recommended by:
      gjohnsit, zaka1

      Through the deregulated shadow banking system the 1% looted the world economy transferring a huge segment of wealth from the many to the few. In doing so their short sided greed killed the goose that laid the golden egg.

      The consumer class of the first world nations that was the basis of the world economy has been mugged and left for dead. No consumers, no economy. This did not have to happen. Austerity will just make that worse. Taking the money back from the people who stole it and restoring stability and the rule of law and regulation to global finance is the only cure.

      Otherwise Greece is the future of all the industrial nations. Screw the Euro the Greeks should look to Argentina and Iceland not the bankers as a model for dealing with the crisis.

  •  This is so wrong it's almost beyond words: (6+ / 0-)
    To put this as plainly as possible: a central bank being forced to buy up the debt that it just issued, in order to hide the fact of the failure to find buyers for its debt, is the perfect example of a Ponzi scheme reaching its end game.

    No, it's not. Consider the case of Italy. It's running a primary surplus, and has minor economic growth. Provided interest rates stay low, it can gradually pay down its debt.

    So, why aren't interest rates staying low? Because panics can become self-fulfilling: Investors demand higher interests rates, which increases the debt service burden to unsustainable levels. As a country finds itself unable to service the higher burden, investors quite understandably demand even higher interest, leading to a spiral into bankruptcy. This is basically what happens in a bank run, only the victim is a state.

    The trick is that a central bank can short-circuit this process by deciding to buy bonds at a certain price, effectively engaging in minetary creation. Won't that lead to inflation? In a liquidity trap, probably not. The US has tripled its monetary base since 2008, and inflation has been minor.

    The importance of intervention by the central bank to avert panics is not some radical idea. It was well-understood when Bagehot wrote Lombard Street - in 1871! It was used by Britain with success in the 1840s, 50s, and 60s. It should not be controversial. But for some reason it is.

    And there's the rub: The ECB's programme is strictly temporary, not an open-ended commitment, and pretty much barely functional since the ECB does not buy bonds unless it can sterilise them by reselling to the private sector. In a panic. Awesome, that.

    Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

    by Dauphin on Mon Nov 14, 2011 at 03:28:46 AM PST

    •  The situation with Italy almost looks like (0+ / 0-)

      an engineered attack by the financial markets to force austerity and privatization reforms on the public.

      BTW, I'm not talking about an engineered conspiracy per se but rather a cabal of independent financial interests who see opportunities for financial gain by piling on. We have seen this over and over in the oil and commodities markets. The financial markets have become so large and wealthy they can now affect the markets almost at will.

      All these crisis in Europe have been great for the neoliberal agenda. Lots of goodies to be had in Italy.

      Italy's Senate approves austerity plans

      Intended to cut spending and boost growth, they include pension reform, with plans to raise the retirement age from 65 to 67, the privatization of state-owned companies and sale of state-owned properties, the liberalization of certain professions and investment in infrastructure.

  •  I always read your diaries attentively, gjohnsit (5+ / 0-)

    and I learn a lot from them.  Here, though, your brief summary of Italy is superficial at best and totally wrong at worst.  

    I live in Rome, my husband is Italian and has a government job, so I definitely have a vested interest in Italy not defaulting and the Euro not failing.  Some may claim that my perspective therefore forces me into an unfounded optimism.  And yet I am optimistic.  

    First, please see the NYT's thoughtful background article on Mario Monti.  As you will see, the advisory position for Goldman Sachs plays a relatively minor role in his career.  He is a renowned economist and President of Italy's most prestigious economic school, Bocconi in Milan.  He served for years at the behest of both center-right and center-left governments (Berlusconi and Prodi) on the European Commission.  He was critical to antitrust suits in Europe against GE and Microsoft (probably a reason he's not loved by the US).  He is known to be generally politically neutral (whatever that means), though our guess is that he leans right.  

    Monti was not "installed" by Brussels or Goldman Sachs.  He was seen as the only viable alternative as Berlusconi's coalition crumbled while speculators began to attack Italian markets.  While Berlusconi's resignation was precipitated by the markets, the political problems he had started back in 2009 and his split with leader Gianfranco Fini (who now leads the party known as Fli).  Since Fini and his group joined the opposition, Berlusconi has had to panic with every confidence vote in order to assemble a thin majority--basically by buying everyone off.  As the stock market began to tank and there was more panicked talk about the Btp-Bund spread, while the coalition quibbled about details in the austerity measures presented to the EU Commission 2 weeks ago, it became increasingly clear that Berlusconi's gov't would not make it to Christmas.  Berlusconi's primary partner, Lega Nord (racist separatist bastards), had already suggested that it would be a good idea to go to elections by January.  

    So now we have Monti.  Did you happen to see the scenes of elation on Saturday night as Berlusconi tendered his resignation to the President of the Republic, Giorgio Napolitano?  There is an enormous sense of relief here that these corrupt, bigoted, sexist assholes who haven't done shit except protect their own asses in the last 3 years--hell, let's make it 17 years--are finally gone and that there is a sane, logical, serious person heading the government.  Even if he worked for Goldman Sachs.

    •  In re-reading this, I just want to add (3+ / 0-)
      Recommended by:
      Athenian, Deep Texan, seaprog

      I am also worried about the anti-democratic way in which Italy is being forced to deal with its economic issues.  Mostly, I'm getting sick of hearing what Angela fucking Merkel has to say about Italy's progress or lack thereof.  I was so glad that Mario Draghi, upon assuming the helm of the ECB, dropped interest rates against Germany's wishes.  It's time to establish a little equilibrium in the EU.

    •  I should clarify a few things (3+ / 0-)
      Recommended by:
      zaka1, smellybeast, seaprog

      I never said that Monti was appointed by the bankers, that he ultimately answers to Goldman, that he was an executive at Goldman, or that he is evil.

        But Gosh darn it, doesn't it make you a little concerned that another damn former Goldman guy is taking over? Don't we need FEWER bankers, not more of them?
         This is a PM position. That's the place for politicians to stand up for the people (theoretically). Not a place where the creditors will be able to dictate.

        The fact is that the country is facing a financial crisis with foreign creditors, and suddenly the elected PM is gone and replaced by an unelected guy who used to work for the foreign creditors.

      It looks bad.
      Even if it isn't bad, it still looks bad.

        As for the celebrations in Rome, those were for the end of Berlusconi, not for the entrance of Monti. It was a "Ding Dong the witch is dead" party.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Mon Nov 14, 2011 at 05:30:13 AM PST

      [ Parent ]

      •  Well, you sure seemed to suggest it (3+ / 0-)
        Recommended by:
        Deep Texan, Iberian, missLotus

        in your last paragraphs regarding Vampire Squid taking over the world, I'm assuming using Monti as one of its tentacles, and also in a few your comments in this thread.  Regarding Goldman, honestly, it's getting kind of hard to find someone of economic/financial importance who hasn't worked for them at some point in his/her career, and that is troubling.  

        This a PM in a technical government.  Nobody really wants a technical government; everybody wants to go to elections, but realize now is not the time.  There is no guarantee that Monti's government will make it until the end of the term in 2013 because the political parties will always have a say in what becomes law.  The real problem is the constant specter of market speculation, i.e. "if you don't pass the austerity measures we want, YOU WILL DIE," in decision making, doesn't matter who holds the office.  

        That's the reason that they had to resort to a technical government in the first place.  If they had called elections immediately, the lack of stability would cause the markets to shut down, the spread would go over 8% and that would be it for Italy.  There were no other options.  

        Yes, I'm aware that the celebrations in Rome were for the end of Berlusconi.  I was there.  I don't know how to convey to you the sense of relief--both on the left and right--that Monti currently holds the reins.  I have no statistics, just anecdotal evidence.  

        •  I disagree (0+ / 0-)
          Nobody really wants a technical government; everybody wants to go to elections, but realize now is not the time.
           The solution for a crisis of democracy is more democracy.

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Mon Nov 14, 2011 at 06:08:49 AM PST

          [ Parent ]

          •  Then the entire Italian parliament is wrong (0+ / 0-)

            and you are right.  

            •  You say that (2+ / 0-)
              Recommended by:
              zaka1, seaprog

              like its supposed to mean something to me.

                For example, a huge majority of the people of America were against the bank bailouts. Congress supported it.
                 The people were right and Congress was wrong.

               I'm never going to apologize for opposing the politicians and supporting democracy.

              "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

              by gjohnsit on Mon Nov 14, 2011 at 07:14:56 AM PST

              [ Parent ]

              •  You can get off your soap box now. (0+ / 0-)

                A little arrogant, don't you think, to suggest that the rest of us support democracy a little less?  The left and the right joined together to avoid an impending economic catastrophe.  They are supported by a majority of the people in Italy.  

                A little example:  Antonio Di Pietro is the leader of the Italia dei Valori party which has about 7% popularity, a significant presence in parliament, allied with the center-left coaltion. Di Pietro suggested last Thursday that he would vote against a Monti government.  His own supporters deluged his facebook page and web site, threatening to withdraw their allegiance to him if he didn't do the logical thing and support Monti.  He has since moderated his position twice, once to say that they couldn't support a government without knowing what the specific program would be first, and then again just yesterday he stated that he would give a provisional "Si" to the Monti government, though again he wants to see the program.  

                There is tremendous pressure by the people to make this government work in the name of saving the country.  

                •  But I like it up here (1+ / 0-)
                  Recommended by:
                  seaprog

                  I just saw the headlines today and the first thing Monti wants to do is cut 300,000 public service jobs and raise the retirement age.
                     That sure does sound like the banker's script to me.

                    As for "saving the country" and "preventing an economic catastrophe", that is pretty much exactly how the bank bailouts were sold to us in America.

                   Look, I'm not making this stuff, nor am I trying to mislead. I have nothing to gain from doing so. Nothing at all.
                     I'm just saying that the corporate owned media is lying to you, and that you should question everything they say. Even when you agree with them.

                  "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

                  by gjohnsit on Mon Nov 14, 2011 at 11:19:44 AM PST

                  [ Parent ]

              •  And for what it's worth, (1+ / 0-)
                Recommended by:
                historys mysteries

                I just found a nice article by Beppe Severgnini in English.  See what you think:  "Italians Want a Comeback, Not Decline"

  •  Must Read! (1+ / 0-)
    Recommended by:
    gjohnsit

    Article by none other than J.K.Galbraith.

    The crisis in the eurozone

  •  This whole diary is based on bullshit. (3+ / 0-)
    Recommended by:
    Deep Texan, theano, Iberian

    If you go back and read about the trials and travails the US government went through to get the federal dollar accepted as the universal currency, you will see that all this hand-wringing is just a bunch of corporate pundits crying "wolf".

    France is not gonna topple. Not. Gonna. Happen.

    "Alcohol enables Congress to do things at eleven at night that no sane person would do at eleven in the morning." - George Bernard Shaw

    by Loose Fur on Mon Nov 14, 2011 at 06:04:51 AM PST

  •  Germany holds the delusion that they're above it, (2+ / 0-)
    Recommended by:
    SneakySnu, seaprog

    that the coming crash will only affect those weaker, shiftless, Southern European countries. Hence Merkel is unable or unwilling to grasp the fact that it will drag a "healthy" German economy right into the abyss as they are chained to those of France, Spain, Portugal, Italy and Greece.

    I honestly believe that this reflects the contempt Northern Europeans still tend to feel toward Southerners. It's only slightly more subtle than prevailing American attitudes toward brown people.

    True story: my dad's family is German-American. My mom's is mixed Irish/Italian, and she looks very Italian. When they first started dating, dad's family reluctantly agreed that she was "almost white". And they treated her like gum on their shoes.

  •  I feel better (3+ / 0-)

    knowing that savvy businessmen are running Greece and the ECB.

    "It's called the American Dream because you have to be asleep to believe it." George Carlin

    by psnyder on Mon Nov 14, 2011 at 06:24:09 AM PST

  •  Ending Lex Berlusconi (1+ / 0-)
    Recommended by:
    SneakySnu

    is certainly a good thing. The unprecedented corruption and tax evasion under Berlusconi needs to stop.

  •  But calling it a conspiracy, that's (2+ / 0-)
    Recommended by:
    gjohnsit, thestructureguy

    just irresponsible and inflammatory.

    -5.38 -4.72 T. Atlas shrugged. Jesus wept.

    by trevzb on Mon Nov 14, 2011 at 10:33:02 AM PST

    •  What is your definition of conspiracy? (0+ / 0-)

      Would you accept "cabal"?

      From wiki:

      Cabal, an association between religious, political, or tribal officials to further their own ends, usually by intrigue

      Conspiracy (civil), an agreement between persons to deceive, mislead, or defraud others of their legal rights, or to gain an unfair advantage

      Conspiracy (crime), an agreement between persons to break the law in the future, in some cases having committed an act to further that agreement

      How much of these descriptions can be legitimately applied to investment banks such as Goldman Sachs?

  •  Greece and Italy both have very strong hard lefts (0+ / 0-)

    Italy also has a very strong fascist party as well. I would imagine that if things keep getting worse, we are going to see some very radical changes go into place. This is the type of situation in which dictators are elected or people take control over the government.

    That being said, I think it is overstated. Germany and France can carry those member countries. England might be able to step in as well. If they have to kick out a few nations, than so be it.

  •  It’s wobbling like an old man’s tooth (1+ / 0-)
    Recommended by:
    gjohnsit

    Nudniks need not apply.

    by killermiller on Mon Nov 14, 2011 at 05:07:14 PM PST

  •  I forget the name of the organization (2+ / 0-)
    Recommended by:
    mskitty, gjohnsit

    but there is a London outfit which rates European sovereign debt, and 7% is not merely symbolic - it is the interest rate at which these "technocrats" start asking people to put up more insurance against default on the, e.g., Italian bonds.

    In effect, a margin call on holders of sovereign debt. That's not ever supposed to happen.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Mon Nov 14, 2011 at 06:57:47 PM PST

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