Europe’s Modern Titanomachy: How Europe’s future is being shaped by large battles on seemingly small matters (Part B)

PART B – Mr Draghi’s nod to Euro-loyalists

On 8th August 2012 the President of the ECB acknowledged that the Eurozone was at an advanced process of disintegration and, in the same breath, promised to do what it takes to put a stop to it. On September 6th came his OMT announcement that many commentators see as a game changer. While most acknowledge that it will not suffice as a weapon with which to win the war against the Crisis, it has given Euro-loyalists a chance to argue that, in the end, Europe has a way of resolving its crises. The fact that the OMT announcement overlapped, time wise, with the impressive document issued by the European Commission regarding the formation of a proper banking union and, also, the German Constitutional Court’s grudging acceptance of the right of the ESM to exist, gave rise to a collective Euro-loyalist sigh of relief.

For the purposes of, as they say, full disclosure, these lines are written by a Euro-critic, though definitely not a Euro-clast (see Part A for the distinction). I am saying this because one would be excused to think that, as a Euro-critic, I have a vested interest in seeing Mr Draghi, Mr Baroso and the rest of our European leaders fail in their quest for a solution predicated upon the basic assumptions and policies that have, so far, not been revised or amended. For my part, all I can do is try to look at the new situation without prejudice and with a fresh analytical eye. So, let’s take a fresh look at the situation the Eurozone is facing: Have Euro-loyalists been vindicated?

The Euro-loyalist position was that, in good time, Europe will rise to the occasion and will create the institutions necessary for overcoming the Crisis threatening the euro. What are the minimum institutions necessary to accomplish this? I think we all agree that there are three: First, a proper banking union. Secondly, a buffer between the national debt of different member-states that prevents a sequential run on their bonds. Thirdly, a strategy for dealing with a dearth of aggregate investment and with internal imbalances (of investment, capital flows and trade) – what I like to call a Surplus Recycling Mechanism. How much closer is the Eurozone to getting these three institutions up and running before the Crisis wrecks its foundations completely?

Starting from perhaps the last of the three missing institutions (the Surplus Recycling Mechanism), there is little to say, save for the observation that it is not even on the agenda. It is quite instructive, and sad, that in the case of the, say, Greece, the European Investment Bank, instead of being the pillar of all attempts to help the collapsing social economy grow, has been neutered by the unfolding fiscal and banking crisis. While Greece has 12 billion euros pending from Brussels (unspent structural funds for the 2007-2012 period), the European Commission is only channelling 1.44 billion to the EIB for investments in Greece. Without any plans for a pan-European investment strategy, centred around the EIB, Europe’s growth and rebalancing prospects are looking very dim.

Regarding the Banking Union, we have a clash of titans brewing. A new Titanomachy is raging, as these lines are written, between German bankers adamant against any serious supervision by the ECB and the Commission which has issued a splendid paper on what Europe’s banking system should look like within a few years. The Titanomachy in question is neither visible to the naked eye nor is its outcome predictable. As I have written elsewhere, the German Finance Ministry is adopting the language of a banking union in order to deny the substance. This does not augur well for a banking union that succeeds in its main task: to de-couple the banking crisis from the crisis of national debt in the Eurozone’s Periphery.

Let us now turn to the other institution which is sine qua non for ending the Crisis: how to finance the stricken nations, Italy and Spain more significantly, that are caught in the clutches of a postmodern Gold Standard, unable to finance themselves, at a time of vicious recession. What would take to end this? Whatever institution is created, it must be centred upon the ECB and must find a way of bypassing the no bailout clause that was the ECB’s foundation stone. In our Modest Proposal, Stuart Holland and I have outlined a simple way of doing this: the ECB acts as a go-between member-states and financial markets, borrowing on their behalf at attractive rates and organising a credible repayment mechanism which would see to it that the new loans are repaid by the national governments, thus ensuring that the ECB need not monetise their debt (either at the primary or at the secondary markets). The only serious argument against this proposal, that I encountered amongst policy makers, was that this would give the ECB a role that no other Central Bank has ever had. Germany, apparently, is eager to ensure that the ECB abstains from ‘innovative’ Central Banking. Our proposal struck them as too innovative at a time when minimum innovation was a political imperative.

The only other serious alternative being discussed at the time was to give the ESM-EFSF a banking licence, allowing it to lever up its loans to the stricken member-states using the ECB’s balance sheet. I opposed this idea because I considered the very structure of the ESM-EFSF toxic (especially when bank recapitalisations add new debt to the sovereigns that fund the ESM-EFSF, and which may need funding from the latter). Levering up a toxic fund was not our idea of good policy. Still, the US Federal Reserve, the French government, and possibly a majority of the Eurozone’s Periphery secretly hoped that the ESM-EFSF could get its banking licence. Well, it did not. Yet, Mr Draghi’s eventual ‘solution’, his OMT, comes pretty close to this.

Under an ECB-turbocharged (or leveraged) ESM-EFSF, the Eurozone’s bailout fund would borrow say 5 euros for each euro that it was funded with by governments in order to lend to countries like Italy and Spain, under strict IMF-troika-like conditionalities of course. This was deemed politically, even morally, unacceptable by Mrs Merkel, by the German constitutional court, by German public opinion etc. So, what will the OMT do differently? Not much, according to Gavyn Davies. Here is Davies’ argument:

Under Mr Draghi’s OMT, Spain will have to submit to a strict IMF-troika-supervised fiscal adjustment program. Once the program is approved, the ESM-EFSF will lend monies to Spain directly (i.e. purchase Spanish bonds in the primary market) while the ECB fires up its digital presses to create the money with which it will purchase many more ‘second hand’ Spanish bonds (of a maturity that does not exceed 3 years) in the secondary markets.

While Gavyn Davies has a point, I think there is an important difference between the ECB-leveraged ESM-EFSF idea and OMT. Under OMT, the ESM-EFSF will be more limited in how many fresh bonds it can buy (as its funding is severely circumscribed). This means that Mr Draghi will have to print a lot more money so as to direct it to the secondary market so as to keep Spanish interest rates low. In reality, his OMT is a less efficient version of the ECB-turbocharged ESM-EFSF model. The political significance of this is that the ECB will face more flak than necessary from the Bundesbank for achieving the same compression of interest rate spreads within the Eurozone (as it will have to print more money to achieve the same effect that an ECB-leverage ESM-EFSF would have). Still, to be fair to Mr Draghi, he may well reply that the OMT’s merit is that, unlike the ECB-leveraged ESM-EFSF plan, it was possible to sell it to the German polity now. In essence, short term political acceptance in Germany was bought at the cost of greater long term German opposition to the ECB’s operations; a point that resonates with Wolfgang Munchau’s analysis.

Be that as it may, the question is how effective the OMT system will be in providing a proper “buffer between the national debt of different member-states that prevents a sequential run on their bonds”. It all depends on whether bond market participants take a look at it and decide that it will not pay them to bet against its integrity. Will speculators wager a few billions that ‘unspecified bond purchases’ means something different to ‘unlimited bond purchases’? Will they want to bet perhaps that, in the end, the Bundesbank will win the argument against Mr Draghi, thus pulling the rug from under his feet? It will also depend on what the OMT means for countries that are already in the clutches of troika programs. Will the ECB be purchasing Irish, Greek and Portuguese bonds in the secondary markets? Will the spreads that the ECB aims at for each member-state be the same? If not, who will determine, and on what basis, the difference between these target spreads? The ECB itself? Europe’s political leaders? Is it possible to imagine that a country like Greece is turned into a kind of Kosovo (a protectorate with the euro as its only currency but with no functioning state, a derelict banking sector and a disheartened mafia-ridden society whose only export is its people plus tourism) while the OMT successfully saves Spain and Italy?
Euro-loyalists will probably answer that it is too early to be negative about Mr Draghi’s OMT. That this is only one step in the direction of a fiscal union, a Federal Europe; as evidence by Mr Baroso’s recent bold statement. Their only worry is that the OMT’s success, even the ebullience that its announcement caused, will alleviate the pressure on governments that keeps them on the straight and narrow, thus raising the prospect of a negative troika report which, in turn, will force the ECB to withdraw its OMT assistance to the said member-state; at which point the latter will face a serious prospect of ejection from the Eurozone, therefore landing us back to the present mire of, in Mr Draghi’s words, “convertibility risk” (the euphemism he coined for Euzone disintegration). Still, Euro-loyalists hope that, before such a cul-de-sac is reached, Mr Baroso’s plans for the Eurozone’s federation will be so advanced that the centrifugal forces will be tamed.

In summary, Europe is currently in the clasps of a ruthless Titanomachy. In the red corner, the German banks are struggling with all the force they can muster to avoid a proper banking union. They are joined by a Bundesbank determined to stick to its guns, undermining Mr Draghi’s efforts to monetise part of Spain’s and Italy’s debts so as to compress the interest rate spreads between the core and the periphery which guarantee the common currency’s, and the single market’s, failure. Over at the blue corner we have Mrs Merkel, Mr Hollande and Mr Barosos who have formed an alliance of convenience backing Mr Draghi. For the time being they are keeping the German bankers (private banks plus the Bundesbank) at bay. But their greatest enemy is silent, sinister and is working away underground, eating into the Eurozone’s foundations. Who is that enemy? The unrelenting logic of disintegration buried deeply into the recessionary macrodynamics of today’s austerian Eurozone.

PART C – The Euro-critics nightmare: Europe continues to disintegrate despite Mr Draghi’s OMT

[To be continued tomorrow]

42 thoughts on “Europe’s Modern Titanomachy: How Europe’s future is being shaped by large battles on seemingly small matters (Part B)

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  11. Anna v αυτα συμβαινουν παντου σε καθε οικονομια σε μικροτερο η μεγαλυτερο βαθμο.

    Αν φταιει το δημοσιο , εξηγησε μου η ισπανια με πλεονασμα 22% πρην 2 χρονια και μικροτερο δημοσιο τομεα η , η ιρλανδια που δεν ειχε δημοσιο και μεσα στο μνημονιο απωλησε το μεγαλυτερο ποσοστο μεχρι και δασκαλουσ για αναπηρους , γιατι ινε χειροτερα η μια απο τα ιδια?.

    For the record 78% of world debt ειναι ιδιωτικα χρεη αλ΄λα το κανουν γαργαρα γιατι δε συμφερει.

    Στην ελλαδα το δημοσιο ειναι 625.000 σα ποσοστο ειναι το ιδιο η λιγοτερο απο τη Γαλλια για παραδειγμα.

    Πρωταθλητες στα δημοσια εξοδα με τουλαχιστον 3 φορες πανω απο την Ελλαδα ειναι οι Σουηδοι , δεν βλεπω να εχουν καποιο προβλημα.

    Ολο το θεμα ξεκινησε απο κερδοσκοπικες επιθεσεις εναντιων τον ομολογων και θα ειχε τελειωσει το ζητημα αν η ecb τα αγοραζε τοτε χωρις πολλα , πολλα γιατι μια χωρα με 3,5% αναπτυξη και 0,5% επιτοκια το 2008-2009 δε ειταν δυνατο να ανεβαζει spreads ξαφνικα.

    Τελειωνοντας τα και καλα χρηματα απο τα μνημονια ( που ειναι πλλα συναλαγματικες και ποτε δεν ερχονται στη χωρα αλλα ξεπλενουμε δισ – δευτεροι στο κοσμο μετα το μεξικο με πανω απο 90δισ ξεπλυμα για φετος) ειναι για να ξεπληρονουν τραπεζικα δανεια ακα ιδιωτικα κατα το 90%.

    • @st3roids

      Η πεποίθηση μου είναι ότι αν είχαμε φοροδιαφυγη κλπ στα ιδια επιπεδα με τις χωρες που αναφέρεις, δεν θα πεφταμε σε αυτή την κρίση. Χαρακτηριστικό ειναι ότι στο , δείκτη διαφθορας είμαστε σε κακή παρέα.

      Ναι, παντού υπάρχει διαφθορα, αλλά το μεγεθος παίζει ρόλο. Όπως στις αρρώστιες,μπορεί να κουβαλάς μικρόβια και να ζεις θαυμάσια αν το ανοσοποιητικό σου δεν διαρραγεί. Τα ποσά των μικροβίων παίζουν ρόλο στο αν θα σπασει το ανοσοποιητικό.

  12. Γεια σου γιαννιὀ
    Αφού τα μάτια μου ανοιχτά τα λάθη μου θωρώ τα
    μα κάνω πάλι δεὐτερα γιατί ξεχνώ τα πρώτα….

    η ιστορία της ευρώπης σε μια μαντινάδα…

  13. Admittedly all of you guys are more anti-Europeans than I had originally thought! When steps are taken towards an action which would by all means bring more calm to the markets, then I do not really believe that we (supposedly part of European Integration) should undermine it from the inside. Technicalities and details, as well as opportunities for improvement will always exist. What we should separate is economic ideology/theory from real world practice. My comments on:

    • Only we cannot. Behind every ‘real world practice’ lurks an ideology. The more this is denied the uglier the ideology that is practised.

  14. Pingback: John Ward – Eclusive : ‘Bankfurt And The Us Out To Stop Draghi’ – German Bankers, IMF ‘Blocking ECB Plans For Bank Union And Greek Rescue’ – 14 September 2012 | Lucas 2012 Infos

  15. Without adding Part C Yanis, you have already highlighted the underlying problem no one wants to talk about; I might add, not even you; that the entire conversation is centred upon the needs of government finances; when all the evidence from outside of this debate is all about the missing grass roots private sector economy. A point I will keep highlighting; right across the entire Western economies, the debate is centred upon the need to finance government with no real input to the debate; indeed no open apparent recognition of the real need for a debate; about where to find the equity funding for grass roots private sector job creation.

    Until that need, (the missing equity capital funding), for the creation of long term, stable, grass roots private sector employment is recognised as the underlying cause of the overall problems faced by governments; ergo driving their lack of tax income caused by their impossible situation regarding excessive borrowing to try and cover up that lack of a successful grass roots private sector economy; it is impossible to see any solution that will work.

    All you are doing here is to reshuffle the pack of cards when the most vital card, grass roots equity capital investment into jobs; has been long ago stripped from the pack by the players

    Governments long ago created a situation where they are now in complete control of job creation funding. But all they fund now is more government sponsored job creation while all around them the grass roots private sector economy has collapsed.

    The debate must be refocused upon the needs of the grass roots private sector; but that leaves the question; do any of you within the economics profession, currently living in Ivory Towers; have the prior education of life down at those grass roots and thus the associated knowledge tools for the job?

    • There is about 400 billions of dead money in Canada. There is 2 trillion dollars of dead money in USA. There is about 32 trillion of USA citizen’s money stashed away in some far away banks where the USA government can’t touch them. The companies have spare capacity to produce. Creating jobs is not the problem. Having consumers that have money to spend is the problem. So the problem is really the distribution of money. You can fix it by just taking the money of those who have it and distributing to those who do not have them or you print money and give it to those who don’t have it. That’s inflation but it can hurt the weak like pensioners between those who deserve to be hurt or you can go to war for some stupid pretext and produce goods that are immediately destroyed. That a demand too and that creates lots of jobs.

    • @Demetre

      I think everybody reading this board would enjoy this book :

      “The Scheme For Full Employment
      by Magnus Mills

      The Scheme was designed to provide an honest wage for an honest day’s labour. Men driving identical, rust-resistant Univans deliver Univan parts to strategically spaced warehouses. Simple, self-perpetuating and efficient, it seems destined to last forever” .

      What you are describing is the beginning of what will happen mathematically if/when energy becomes freely available and robotics advances to the point of doing all the routine and repetitive jobs that now more than 80% of humans do to earn their daily bread.

      Part of the current unemployment is due to that, as huge tractors cultivate land that needed hundreds of workers. Also part of the growth of civil service and bureaucracy, not only in Greece, is due to the need to give employment to people displaced from their agricultural jobs due to advancing technology.

      If there is no WWIII to restart the clock and begin from the beginning once more it is inevitable that economic modelers should wake up and smell the roses.

  16. Bernake yesterday gave a “credibly promise to be irresponsible” as a woodford paper critisice him for been wrong.In short the paper argues that quantitative easing is mainly effective through its effect on expectations.

    Now fed is promising unlimited bonds buying till unemployment reaches 7.0 percent down from the current 8.1

    Bernake sais “The point of having capital is, from time to time, to spend it.”

    Meanwhile in the euroland …

  17. Pingback: Yanis Varoufakis: Europe’s Modern Titanomachy – How Europe’s Future is Being Shaped by Large Battles on Seemingly Small Matters (part B) | GearSoft's Times

  18. Pingback: EXCLUSIVE: ‘Bankfurt and the US out to stop Draghi’ | A diary of deception and distortion

  19. Is it true that Germany has no physical resources except coil? That the German economy is based only on exports of manufactured goods and services ? What will happen if suddenly the demand for cars, electronics, etc. collapse? Is Deutsche Bank 50% more leveraged than Lehman Brothers ? Mr Soros warned that there is a bubble in German properties (houses and other buildings). Do you expect recession in German economy in the next months ?

    • Dear AZ
      Germany has not got many natural resources, coal really is the major one. Coal production in Germany is not competitive versus e.g. Australia as German coal is deep under the surface (often around 1000 meters) which makes it very costly to produce.
      There are some other resources, but unlike Canada or Australia, Germany surely cannot rely on its natural resources as a major factor for its economy.

      I don’t think that there is a bubble in German real estate: Both in absolute terms and in terms of affordability and in relation to rents, German property prices are not very high, at least for residencial property (for commercial property, I am not sure – but prices are far lower than in e.g. London so I don’t think there is exactly a major bubble there).

      German banks – as most European banks – are very highly leveraged.
      However, statements like “German banks are 50% more leveraged than Lehman Brothers” may be technically right (I don’t know if they are) but I don’t think they give us much insight. Lehman Brothers was an investment bank and their leverage plus the kind of “investments” / the bets they made obviously made it collapse.
      I don’t think German banks are in a very similar position. They surely have some exposure to peripheral assets, which is now obviously a major risk.

      On the other hand, do you want German banks to further reduce their exposure to assets from e.g. Spain and Greece? Where do you think foreign capital will come from if German banks did not invest anymore at all in the Eurozone periphery? Or do you think that suddenly, even though these countries still have current account deficits, they don’t need any capital inflow? If so, how would that work? If the ESM and the ECB’s new approach managed to help stabilize the periphery’s interest rates, then this could be a win-win situation: German banks may receive some high-ish interest payments and still not loose too much more money due to further debt restructuring in e.g. Greece or Spain.

      Regarding your question of what would happen if suddenly, demand for cars, electronics, etc would collapse: What do you think would happen? My personal guess is that this would hit German exporters hard – but luckily, the share of German exports going to the Eurozone’s periphery is small and shrinking. I don’t think that falling exports to e.g. Spain and Greece would cause huge problems for the German economy as loong as the world economy including China, Brazil, Russia and India keeps growing. What could really devastate Germany would be an unorderly break-up of the Eurozone – or a continuous, huge transfer from Germany to the periphery. But there is no need for that to happen – and an unorderly break-up would also be devastating for e.g. Greece and Spain, so why should it be allowed to happen?

    • Dear Dean
      No worries – considering the huge risks Germany takes in order to try and save the Eurozone from immediate collapse (just to be continously insulted by people like you) I am fairly “optimistic” (following your perspective of wanting Germany to fail so we can all be miserable together) that Germany will be downgraded mid-term.
      Isn’t that great?
      I am sure you will feel much better then.

      As we all know, it is solely Germany’s fault that there is a crisis at all, that is has been handled so badly – and even that Greece and others have taken way too much debt on is somehow Germany’s fault (because we “forced” you to buy our products, for example).

      One thought about breaking the 3% rule of the Maastricht treaty: It bugs me that Germany (and France) failed to respect the 3% limit of new debt as a percentage of GDP in 2003-2005 (or so). However, this does not make it any better for Greece and e.g. Italy:

      It strikes me as similar to a pedestrian crossing a road when the light is red.
      Everybody knows that you should not do it.
      However, depending on the individual (and strongly influenced by the prevailing mentality of the country where you are) you may respect such rules – or not.

      If you follow the rules and something happens to you, then fine (I’d see Spain in that category). If you don’t respect the rules, then maybe, you will get punished by the policy and have to pay a fine. That did not happen in our example, partly because Germany and France bend the rules in their “favour”, too.

      However, if you are not following the rules, then the risk is yours.

      It is like crossing the road when the light is red: If you get struck by a car – bad luck!
      That is what bugs me with Greece: That country has continuously ignored all sorts of rules that came as a condition to joining the Eurozone.
      Pointing at Germany having failed to always respect some of those rules, too does not fly in my eyes. These rules were not enough – and they were not enforces well enough (or not at all, really).
      But they had some sense.
      When a country ignores such rules, then it can do so – but be aware it cannot blame anybody else if, e.g. you end up with way too much debt. To prevent this from happening was the exact idea why such rules exist.

      Just a remark…

      Anyway, now Greece has been run over by a truck and feels accordingly.

      We need to help Greece, no doubt about that.
      But it would be nice if even you could see one day that not everything bad happening in this world (or to Greece) is due to Germany being evil. And that following rules is uncool – but ignoring them is dangerous and leaves you with nobody to blame if things go belly-up.

  20. Γιαννη καποια στιγμη θα πρεπει να γραψεις ενα αθρο που να εξηγει γιατι αρχισαν να ανεβαινουν τα spreads σε αυτη τη χωρα , ενω ειχαμε 3.5% αναπτυξη και 0,5 επιτοκιο ( το παραμυθι οτι και καλα λογο του 107% ελλειματος αν ηταν ποτε τοσο) τη στιγμη που σημερα οι u.s τρεχουν με 105% και εχουν μηδενικα επιτοκια και 1% πληθορισμο και η ιαπωνια εδω και χρονια ινε στο 200%+ .

    Σημειωτέον και οι 2 χωρες εχουν 0.5 και 0.3 αναπτυξη…

    Οχι δεν ηταν καθολου κερδοσκοπικο χτυπημα …

    Ισως και να το εχεις γραψει καποτε και απλα να μου διαφευγει αλλα καλο θα ηταν καποια στιγμη το παραμυθι να τελειωνει γιατι πολλοι πιστευουν οτι το προβλημα ειναι λογο του δημοσιου … ( οταν οι συνταξιουχοι ειναι στο 28% φτωχιας αλλα η αλλη ευρωπη ειναι στο 18% μαξ και ο φιλος σου ο στουρναρας μιλαει για πολυδαπανο δημοσιο …) οτι φταιει η φοροδιαφυγη και αλλες πολλες αναληθειες , κολοκυθια τουμπανα δηλαδι.

    anyway εσυ και κανα 2 ακομα ειναι η μονοι που προσπαθουν να ανοιξουν τα ματια και αντι να εισπρατεις τα ευσημα σε χλευαζουν σαν δευτεραντζα και εγωπαθη .

    Τελικα τα διαφορα iq studies που βρισκουν τουs ελληνες τελευταιους στην ευρωπαικη ενωση( κυριως λογο κατωτατης ποιοτητας εκπαιδευσης ) μαλλον δικιο ειχαν ;p

    • Aναφερεσαι στο χρεος και οχι στο ελλειμα.
      Καταρχας δεν υπαρχει καποιος μαγικος αριθμος τον οποιο οταν φτασει τ ο χρεος οι αγορες θα αρχισουν να σε πυροβολουν.Αλλα υπαρχει και μια ουσιαστικοτερη διαφορα αναμεσα στην Ελλαδα και τις ΗΠΑ.

      Η μεν Ελλαδα ειναι ΧΡΗΣΤΗΣ του νομισματος,οι δε ΗΠΑ ειναι ΕΚΔΟΤΗΣ του δικου τους νομισματος.Αυτο συνεπαγεται ανεξαρτησια απο τις αγορες σε οτι αφορα την εκδοση χρεους σε τοπικο νομισμα.Ανεξαρτησια που απολαμβανε και η Ελλαδα για χρεος που εκδιδοταν σε δραχμες.Ακριβως γι αυτο τον λογο παρολο που την 10ετια του 90 ειχαμε αρκετες φορες χρεος που ξεπερνουσε το 100% του ΑΕΠ δεν κινδυνεψαμε ποτε με χρεωκοπια.Το δημοσιο ειναι αδυνατον να ξεμεινει απο το χρημα το οποιο το ιδιο εκδιδει.Κατι που δεν ισχυει ομως για τις χωρες της Ευροζωνης.

      Mε αφορμη τον τρομο που ειχε πιασει τους Αμερικανους,σχετικα με τον εκτροχιασμο που θα προκαλουσε η μεταρυθμιση του Ομπαμα στην υγεια η St.Louis FED εκανε μια ενδιαφερουσα εκθεση που εκτος των αλλων λεει το εξης:

      As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.6 In this sense, the government is not dependent on credit markets to remain operational. Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets.

      Αν οπου US Government βαλεις ελληνικη κυβερνηση και οπου δολλαριο βαλεις δραχμη,τοτε η ουσια παραμενει ιδια και γινεται αντιληπτο το τεραστιο μειονεκτημα του να χρησιμοποιεις ενα νομισμα του οποιου τον ελεγχο δεν κατεχεις.

    • ‘Ή εθελοτυφλείτε ή δεν ζείτε την ελληνική πραγματικότητα.


      “πολλοι πιστευουν οτι το προβλημα ειναι λογο του δημοσιου … ( οταν οι συνταξιουχοι ειναι στο 28% φτωχιας αλλα η αλλη ευρωπη ειναι στο 18% μαξ και ο φιλος σου ο στουρναρας μιλαει για πολυδαπανο δημοσιο …) οτι φταιει η φοροδιαφυγη και αλλες πολλες αναληθειες , κολοκυθια τουμπανα δηλαδι.”

      1) α. ‘Οταν μπήκαν στο συνταξιοδοτικό σύστημα μία πληθώρα ανθρώπων που δεν πλήρωσαν ποτέ μία δραχμή για την σύνταξη και την υγεία τους, τότε με την περίφημη αλλαγή το 1981,
      1)β. Παράλληλα τότε γέμισε το δημόσιο με αργόμισθους κλητήρες για να ψηφίζουν τον εκάστοτε βουλευτή ή δήμαρχο, μια τακτική που συνέχισαν όλοι με το αποτέλεσμα του διογκωμένου δημόσιου τομέα, στενού και ευρύτερου.

      2) Όταν είναι παγκοίνως γνωστό ότι οι ελεύθεροι επαγγελματίες πληρώνουν τα ελάχιστα μεροκάματα για ασφάλεια και υγεία και τα άλλα τα δουλεύουν μαύρα, από πάντα

      3)¨όταν όλοι ξέρουμε δημόσιους υπάλληλους που το $ολοβαράνε ή προετοιμάζουν την απογευματινή τους δουλειά στις πρωινές ώρες, ή δημιουργούν γραφειοκρατεία για να δικαιολογήσουν την θέση τους

      4)όταν ακόμα και τώρα κανένας γιατρός σχεδόν δεν δίνει απόδειξη, εκμεταλλευόμενος την ιδιαίτερη σχέση με τους ασθενείς

      5)’Οταν πρέπει να ζητήσεις απόδειξη από το βενζινάδικο , ακόμα και τώρα

      6) όταν ακόμα και τώρα ο υδραυλικός και ο ηλεκτρολόγος και ο επισκευαστής αυτοκινήτου δεν δίνει απόδειξη και δεν την ζητάς γιατί τον έχεις ανάγκη

      7) όταν ακόμα και τώρα σου δίνουν τιμές με ΦΠΑ και χωρίς και εσυ πέφτεις στον πειρασμό του ” εγώ θα σώσω την χώρα, μου κόψαν τον μισθό στα μισά”.

      8)Όταν ακόμα και τώρα εκτός Αθηνών τα αυτοκίνητα που έχουν καταθέσει τις πινακίδες κυκλοφορούν ανενόχλητα στους επαρχιακούς δρόμους, χωρίς τέλη, χωρίς ασφάλεια

      οταν ……

      Δεν έχουμε καμία ευθύνη για την κατάσταση που είμαστε? ” Η Εύα με ηπάτησε;”

      Τα γράφω ελληνικά γιατί δεν μας συμφέρει τις πομπές μας να τις βγάζουμε στα φόρα, αλλά τουλάχιστον άς είμαστε ειλικρινείς με τον εαυτό μας και να αναγνωρίζουμε την ευθύνη μας.

  21. Sorry, this text was way to much for my admittedly limited comprehension. Thus, for now, just one remark to a tiny but important par.

    “between German bankers adamant against any serious supervision by the ECB and the Commission which has issued a splendid paper on what Europe’s banking system should look like within a few years.”

    It is not just the “German bankers” as your paranoia seems to force you to believe. The fight against the centralized banking supervision is even more vigorously led by the French, Italian and Spanish governments and who don’t intend to hand over any sovereignity to EU institutions. Pls. check your facts.

    The only part of the ‘splendid paper’ the German govenrments and German banks really fight against, very understandably so, is to pool the national banking inscurance systems, let alone for existing risks..

    BTW, the part the German public fights against is the mutualisation of debt, let alone existing debt.

    Get the picture?

    • The comments of “Very Serious Sam” reflect a greater reality slowly arising in Europe. Even if, by some miracle, the Euro and the EU are saved, we will have less unity in Europe among the nations than was ever the case before. In spite of all the political & economic solutions being proposed, when the dust settles we will basically be back to square one.

    • You raise a good point in mentioning that it is not only the German banks that would oppose substantial central supervision. However I think that Yannis is focusing on German banks because, well, they are the only ones that can do anything about it. The banking sector is crippled in all the other countries you mentioned and it would be impossible for them to raise their voice in order to influence events. I can’t imagine for example how could the bankrupt Spanish banks that are dependent on bailout funds and ECB liquidity resist anything that came their way. They absolutely would if they could, but they are powerless. One could argue that the German banking sector is not in top shape either. True, but Germany’s economic growth and everyone else’s woes masks that and will continue to do so for the foreseeable future. In the end all banking interests in Europe would rather see the previous status quo remain and they are just buying time in order to avoid the inevitable.

      I have to say that the plan of centralized control seems nothing more than smoke and mirrors for the public. The USA banking sector is under central control (supposedly) and that did not stop it wreaking havoc with the economy at every chance it got (and it got plenty from the fed). The only meaningful matter that a European banking union could tackle in my opinion is that of deposit insurances especially in light of the recent bank runs in Spain and Italy.

    • You must know that the German public opinion is ruled by only two billionair families: Springer & Bertelsmann. They own almost every publishing company and are deeply involved policy making. Merkel is a close friend to Ms Springer and Ms Mohn (Bertelsmann). the Bertelsmann foundation is engaged in “helping” the parliament writing laws. (i.e. Labormarket refoms)

      Very Serious Sam seems to be one of those properly brainwashed Germans or he is working for one of those families. there is no other explanation for his pathetic posts.

    • Yes Sam
      but the difference between those bankers is that only the Germans are behaving like the boss and trying to command the others.
      The others are known to have shitted pants.
      If they were allowed to see inside German Bankers pants, and see the same embarrassing situation, they would have the same bargaining power, wouldn’t they?

    • Dear Lena
      Important German papers that does not belong to Springer or Bertelsmann include:

      Der Spiegel
      Die Zeit
      Frankfurter Allgemeine Zeitung
      Süddeutsche Zeitung

      Your claim is a misleading oversimplification.

    • @ Lena Brandt

      Most of all, Very Serious Sam is not a braindead believer in ludicrous conspiracy theories like, for instance, about two billionaire families controlling the policy making of Germany.

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