I’ve got the sense, from looking at how Germany has reacted to the crumbling Eurozone around them, that they were predisposed to not react until it got personal, until the depressed economy started affecting their own people. Germany made great economic strides by using the Eurozone to their benefit over the last 10 years, and for a solution that would accommodate all of Europe, that would have to recede.
Well, it’s receding. Yesterday, German manufacturing numbers fell. Today, their business confidence index dropped to a two-year low. The weaknesses in the Eurozone economy are finally starting to reflect themselves in Germany. That’s when you’re going to see action.
In fact, you already are. The German-dominated European Central Bank changed their collateral availability, as I see it to basically allow anything to be called “collateral”. This is a boon to banks and has spurred markets forward. It’ll probably last a couple hours, but it’s a sign of a looser policy on at least some fronts.
The political problem for German Chancellor Angela Merkel is that she now has a veritable Army of Europeans uniting in opposition to her. New French President Francois Hollande has led the coalition, and Spain and Italy have joined them – notice Italian Prime Minister Mario Monti’s comments that there’s “a week” to save the Eurozone. And now, the IMF has come out on the side of the doves as well:
The International Monetary Fund on Thursday challenged Berlin’s game plan for pulling the eurozone out of its crisis by advocating a series of short-term fixes that the German government has resisted.
Christine Lagarde, the IMF chief, said eurozone leaders needed to prevent the single currency from deteriorating further by considering the resumption of bond buying by the European Central Bank and pumping bailout money directly into teetering banks.
While Germany has resisted such measures, Ms Lagarde said the IMF was concerned about “additional tension and acute stress” in both the European banking sector and peripheral governments. She warned that the long-term measures being considered by EU leaders ahead of a summit next week were not enough.
Obviously more free money for the banks is not my idea of a solution. But it’s more the trajectory of practically every leader in the Eurozone lining up against Merkel that interests me. As mentioned above, there’s an EU summit next week, and Merkel, Hollande, Monti and Spanish PM Mariano Rajoy are expected to meet. Monti’s basically right – without a solution from the summit, bond investors will pick off Eurozone countries one by one, increasing their borrowing costs to unsustainable levels. Everything in Europe is consequential at this point, but next week’s summit perhaps more than most. And Germany, cornered by the other powers, may see no choice but to act.




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It would also seem depleting EFSF and ESM would be a long term Hail Mary leaving the fallbacks empty. EFSF is supposed to shut down anyway, leaving ESM remaining but depleted? But what then?
Not all of that would be originally German money, either, no?
“The political problem for German Chancellor Angela Merkel is that she now has a veritable Army of Europeans uniting in opposition to her.”
Yeah, but the “Army of Europeans” is broke, and the only way Merkel can “fix” the mess is to tap German taxpayers. That’s her real problem.
Ruh-Roh! Look out German citizens! You are about to be on the hook high up at the top of the cooler.
Europe, Greece, and Spain are pulling at the rope. Germany has been fighting against donating to the banking failures, but the slow down is going to spread far and wide.
TWOOPH! Truth times two, there Kafka.
I’m confused as to what exactly everyone thinks can be done at this point? Without direct and massive stimulus at the lower economic levels, any solution will only prolong inevitable collapse.
Anyone willing to believe that Chancellor Merkel will throw a few hundred billion of Germany’s Euros at the Greek, Italian, and Spanish poor people? No? Then the Eurozone is fucked anyway.
See! You’re not confused at all. Nothing has changed for little” American tax payer persons”. The only change has been seen by the “Global Corporate persons” of the US and other operating nations they belong to.
Exactly. A capital infusion for the banks will not relax borrowing restrictions. Even if it did, this would only serve to transfer the unsustainable debt from the top to the bottom. A capital infusion for the banks will not ease borrowing costs for governments; it will lower them slightly temporarily while creating more unsustainable government debt. A capital infusion for the banks will not creating economic stimulus. A capital infusion for the banks will not create jobs at the middle- or lower-class levels. A capital infusion for the banks will not create food in Greece.
All of the solutions on the table are the wrong ones. This conversation is pointless. Let the bottom fall out, give these people in Greece, Spain, and Italy their sovereignty back, and let them fix their own countries. Merkel needs to just shut the fuck up.
I agree. The basic problem with the Euro is that there is no unifying structure with the power to balance economic inequities. The U.S. has the ability to transfer tax dollars from net positive states like New York to net negative states like Wyoming because they are all equal participants in the political union with a strong central authority established by the Constitution. The EU’s structure is more like that established by the Articles of Confederation. Without a fundamental change in structure the EU cannot survive and one of the primary roadblocks to this is the ambivalence of the people to greater union. Among the most ambivalent are the Germans.
So why is nobody listening to you and I, along with a zillion others speaking the same truths?
Because they are stupid? Nah, it’s because they will lose out on the last few $$$$ floating around. In my opinion, the very thing starving people want most is food. Not GMO food, but real honest to goodness GoodNess. The US is in the same boat as Greece and others. We just have too much propaganda going on to notice the reality.
Exactly. I pointed this out in another great DDay piece last week.
We are under the same austerity measures. We are going through the same unemployment, the same shortfall of food, the same lack of wage growth, the same reduction in social services… We just had more money to start with so it’s taking longer to get to the point of Greece or Spain.
We are all Greeks. We are all Spaniards. Just a matter of where we are along the slow crawl to inevitable collapse.
The current system is unsustainable. Period. The end. There is no saving it. The people must be empowered through their financial clout and the world must sustain a bottom-up mentality if capitalism is to stay.
The only way to fix a consumer-driven economy is to give the consumer more drive. End of fucking story.
it’s a very carefully scripted game of musical chairs and everyone is hoping the record player doesn’t quit working and the music stops. because most of the chairs have been removed and the ones left are broken.
I consume therefore I am ?
David! whose picture did you post in your post. It sure does not look like Angela Merkel.
We all do. That’s the so-called Free Market Capitalizm that drives the cannibalizm to get to the top of the Greed Tower.
Or I am therefore I consume?
I am pretty confident Hollande has some decent ideas for a solution, and that he can bring the Germans on board. He has a good team of economists with him. The only problem is that everyone here is waiting for the Greeks to exit the Euro before they offer aid to the rest of the periphery.
And no matter how much the rest of the EU beat up on the Greeks, they insist on staying…
I’m not sure what’s better, DD, your report or the way Merkel’s dress in the pic, reflected in the glass behind her, makes it look like horns on her head.
This is all very interesting. Neoliberal policies have completely failed in Europe, yet Merkel keeps choosing more neoliberalism to fix a crisis caused by neoliberalism.
Either Merkel continues policies of economic ruin and the Eurozone ends, or Europe violates its own neoliberal thinking and injects massive capital into southern europe to stimulate growth. Either way, Europe has proven the failure of mainstream economic thought.
‘Zactly.
Just in case anybody is actually interested, here’s an interesting discussion of the situation Germany has gotten itself into. It is interesting to see that Germany’s right-wing elite have hurt their country as much as the American right-wing has hurt the US. The host starts speaking in German for a minute, but the rest of the discussion is in English.
http://www.youtube.com/watch?v=GgCT0ArbXnI&feature=youtu.be
“Europe is a victim of plutocracy” says Patrice Ayme in
http://patriceayme.wordpress.com/2012/06/18/europe-victim-of-plutocracy/
an interesting discussion of “SOVEREIGN STATES USE FORCE AND FIAT MONEY.”
Perhaps Angela Merkel and her policies are the Eurozone’s problem.
Then the work that Goldman Sachs did to mask the Greek tragedy, thereby destroying the Euro as an alternative to the Dollar, was a success. That should qualify Lloyd “Doing God’s Work” Blankfein for a Medal of Freedom.
Unfortunately, that doesn’t mean that governments will reject Uncle Milty Friedman’s economic policies.
In terms of mitigating the power of the neoliberal cabal, the best outcome would be the end of the eurozone. Economic stimulation of southern Europe would most likely allow neoliberals to retain power, ironically.
I was rooting for Greece to reject the continuing debt enslavement of the Banksters and adopt the Icelandic Model. Didn’t happen and the neo-liberals won again. Of course, they’re the ones who counted the votes.
I think a small majority of Greek voters legitimately voted for continued debt enslavement. Good luck with that. Perhaps it will give them a little bit more time to leave Greece and find legal work somewhere inside the EU.
No problem!
The leaders will again prepare to think about considering to determine to act. Merkel will go along with that.
Bury that in the text with a large font “Problem Solved” header, again, and tell LaGarde.
Yes, including this one: PIGSexit.
Who the fuck wants to save capitalism, comrade?
Hey, Optimum Chaos -> Maximum Profit.
Chaos is good for you.
Goal!
So are cigarettes.
And radioactivity.