

The euro crisis

A firewall full of holes

The euro zone’s rescue strategy still does not add up

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I can't help it but be very suspicious about Economist-ideas concerning the sovereign-debt-crisis. The utterly embarrassing PR-exercise in support of the City that the Economist published some weeks ago seems to suggest that even the Economist is not free of serving a clientele: The City and how it earns money. Is it a coincidence that anything the Economist proposes also helps the City make money, keep its money or minimize its losses? Sure, maybe this is exactly right. But the smart City boys also told everyone before 2008 that what they did was exactly right (supported by the Economist, give or take). And the boys were wrong. So how about this time?

Risk Manager

It is not just IMF loans that subordinate other sovereigns and bank bond holders, it is all the ECB funds as well. All new private money invested in the zones sovereigns and banks is now subordinated. What private money would invest in that now?

Europe has just made its banks into Zombies. I think they might argue this is a "good" thing containing as it does the normal functioning of an Anglo Saxon bank. There seems no prospect of facing reality in the current narrative. It is getting worse, much worse.

This is why Eurosceptics always sounded so shrill to "refined" ears. We were trying to stop you. We failed. And look what you have done. Europe is being destroyed before our eyes by Europhiles and their ignorant vanity project. It was Eurosceptics who in fact put the best interests of Europe first.

Luftwaffe in reply to Risk Manager

"Europe has just made its banks into Zombies."

As opposed to US and UK banks which are shining examples of financial health, excellent risk management and prosperity, and not at all addicted to el cheapo FED and BoE money...

"It was Eurosceptics who in fact put the best interests of Europe first."

Sure, I also dream about the hero eurosceptics, especially british ones, putting the best interests of the Continent first.

But I always wake up.


Are we surprised the only thing really worthwhile coming out of the recent EU (EZ) crisis according to you here, is the actions of an ex Goldman Sachs banker, indirectly but very effectively, bailing out again the US / UK stock markets, and of course, creating a little cheer in London and New York.

Be that as it may, but I still feel this papers constant view of the "long term" future of the EU (EZ) through the exclusive lens of the unregulated driven "Financial(Crony)Capitalist" London, New York and Washington speculative trading markets, will over time prove again, as with the last few months or so, be completely out of touch with how the EU (EZ) governing elite's see the future of their "Real Economies".

These EU (EZ) business, economic, financial, political and public servant governing elite's are far more experienced and intelligent on how to "macro manage" real political economies compared to their counterparts in the UK / US, who have long forgotten how critical it is for long term sustainability, that all levels of civil society need to share in the "real wealth" of the country / region, rather than just the few.

Sure, under the leadership of Germany, it is going to take a decade or two to return real growth and prosperity to civil societies in the EU (EZ), but Germany has been doing that continuously for its own people since the ending of the second world war, by following its own form of "Social Market" political economy, and I for one, have a great deal of confidence they will be able to do the same for all the people's of the EU (EZ) in this next decade or so.

This of course, is the last thing the UK / US unregulated financial capitalist speculative trading markets want to hear - so be it - as always, we shall see - as hopefully they become the future "Rust Buckets" of the global political economy.

Bierce in reply to Ludwick

You mean the Greeks want somebody else to pay their debts, plus a permanent subsidy every year, so that they can stay in the Eurozone.

Greek polls have "time and again made clear" that the Greeks do not, under any circumstances, want to reform their bloated state bureaucracy or their ossified labour market enough to make staying in the Eurozone viable in the long term.

Ed the Ed in reply to Bernie6

that's the difference between you and I : I always though the EU was a wrong project - and I never believed the euro was anything but token money, doomed since day 1 - many EU admirers threw (fake) satistics and me and laughed of my ideas - now they are no longer laughing - some became like you - both projects were / are a political scam.


First, I loved the EU and the Euro.

Then, I started to hate the Euro.

Now, I hate the EU.

And I am afraid, what I will feel tomorrow.


Those governments that are only interested in cheating rentiers and borrowing will never solver their own country's problems. A la Greece!


Austerity clearly is misguided as long as you have someone else who will foot the bill!

TE argued a while ago that Britain should quit the EU. But for the rest of Europe, they think it's a great idea to be liable for each others debt. Why? I second TDmR4iDgsT.


What recovery? What mood of confidence? Not amongst middle class and poor people. Our incomes have suffered a relative and in increasing cases absolute decline since the introduction of the Euro.

But I guess the Economist cares only about corporations, banks and 'all power to the EuroSoviet Union'.


The banks are buying sovereign debt the sovereigns cannot redeem with money the banks cannot repay to the ECB. This is a pretty expensive way to buy (necessary) time. EU/EZ leaders will fritter it all away as they have in the past. The slow motion train wreck grows by the day.

Pretty soon, the only way out is for the PIIGS to default. But this will trigger the CDS's which the banks wrote. The banks hold both the wrong end of the debt AND the insurance against default. No prize for guessing how this will turn out.


Nobody is asking the Greeks what they want and how much sacrifice they are willing to make. If that does not measure up to what the creditors can swallow, holding their nose if it must be, then the Greeks should be left to their fate. If that means an exit from the Euro, then Franco-German combine should work out a reasonable time-table and mechanism. The worst thing to do will be to make the bail-out so that it endangers other nations, or to encourage another round of reckless borrowing by other Euro-states /reckless lending by Euro banks.


Greece is in default since 2010. As many a Greek contractor will tell you; they are not being paid. OK, Greece is still paying the banks. So those who know only banks say Greece is not in default. They say what Gold Man Sacks told them to say. But banks don't the universe make.

Another point: if Greece stopped paying the banks, there is no need to send Greece to Mars, or Antarctica, out of Europe, or the Eurozone. Once again, banks do not a universe make.

Financial types from Wall Street love to describe themselves as "Masters of the Universe". That would be fine, as long as it's 5 square meters, with no window. Banks do not a universe make, but many a banker in jail should be transmogrified.


As one more inclined to the cock up than conspiracy view of history it seems the EU is muddling along so long as Germany and its taxaying voters play ball.Once real players recognise selective default and insurance starts to become areality the catastrophe curve is reached.

I think Sarkozys departure and the prospect of M Hollande spending faster than "Die Flieglander Hollander" will focus Angela and her electorate,like a garlic enema.

Sadly the Greeks are going to have to chew humble pie and gruel today looks a sounder recipe for the rest of the PIGS,with F,UK and Belgium in the van.Tricly for all politicians but Rajoy,Kenny and Monti with new mandates can blame it on the Germans and have little choice.If they cannot borrow at affordable rates,youth unemployment will be the least of their worries.When you cannot pay thePolice Drs and troops the game is up

.A fairly painful Greek default may well be engineered as a warning.Somewhere I feel sure in the vaults of De la Rue etc the Novo Drachmae are being proofed as I write.
Once Sarkozy's Banksters have offset their liabilities its Adieu Hellas.

Until fit young Europeans and N Americans start producing nearer Asian productivity levels and become net contribitors the only slack will be in welfare and defence for cuts.

The present Persian/Gulf Mid East Horizon ,let alone Spratley Horn Of Africa and Korean tinderboxes indicate insatbility.This can mean only one direction for fuel costs.
Israel and Central Asia could accelerate this,the New Taleban wont enhabce peace and a broad arc from theHindu Lush to Chechnya/Ossetia could hike tensions in atrice

The corollary? Well once sleight of hand that bonds value depends on the holder is discounted ther will be recession n EU and USA while Asia Pacific survives for now.
Any major disruption in the Gulf could also inmpact China Korea and Japan heavily.

When I am retired I am sure we'll see this as the fulcrum decade when the EU must decide on total fiscal integration with all the loss of local autonomy and possible loss of UK Ireland and Scandanavian members into a revived EFTA.

In a global economy all can swing on a mistimed Malvinas manoeuvere,Mr Amhadinjads dentist or a misjudgement i the straits of Hormuz.

In the long run balanced budgets ,less leveraging and lower consumption,less foot print and travel seem desireable and wholly unlikely.American cities largely preclude forgoing the car and it would be abrave president who would enforce car pooloing,steep fuel taxes required to limit fuel use.European and Asian cities are historically more compact and even the middleclass commuter will use clean safe transit if correctly managed.

4MZXmPLi4D in reply to Charles_tcj

No, they pay the most and try to help Greece building up a Government. (e.g. using computers.) But they wanna stick with paperwork. They are like a child not wanting to listen to the wise father but are still depending on him. Greece out, Egypt in.


"THERE is a new swagger among European financial officials these days. As bond spreads narrow, share prices rise and the euro strengthens, many policymakers are convinced the crisis has been solved."

'Those whom the gods are about to destroy they first make proud.'


The Economist is much given to YABbering (Yet Another Bailout).

I suspect that the Euro bailout will only be considered 'complete' by The Economist, when the silliest and most speculative CDS sold by the the most insolvent bank is 100% guaranteed by the German taxpayer.

This is all about bust banks, and financial scams, not primarily about bust countries.


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