tag:blogger.com,1999:blog-36227136.post754412741347105936..comments2024-01-16T08:40:53.682+00:00Comments on <a href="http://www.openeurope.org.uk">Open Europe</a>: Greater intervention by the ECB raises more problems than it solvesOEhttp://www.blogger.com/profile/00556463374230498875noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-36227136.post-9058104154074019452011-11-22T12:26:18.524+00:002011-11-22T12:26:18.524+00:00The Cornish bloke has got this right. This is a so...The Cornish bloke has got this right. This is a solvency crisis, currently for the PIGIS and Cyprus and Belgium. They can only grow out of it outside the Euro. The longer they stay in the Euro, the more it will become a solvency crisis for the 'strong' countries. Austria and France are already feeling the cold wind blowing. And how much does Germany really have to offer? Their deficit is as bad as anyone's, if you take into account their pension black hole.Rollohttps://www.blogger.com/profile/18255460090580758354noreply@blogger.comtag:blogger.com,1999:blog-36227136.post-31727300158526391042011-11-21T14:32:39.985+00:002011-11-21T14:32:39.985+00:00The paradox is clear:
- if you treat the liquidit...The paradox is clear:<br /><br />- if you treat the liquidity crisis (as Soros prefers), by providing an unlimited backstop, you create moral hazard by rewarding profligate countries, and those who lend to them. This makes the solvency crisis worse.<br /><br />- if you treat the solvency crisis (as you prefer) by punishing profligate countries and their lenders, you make the liquidity crisis worse.<br /><br />The only available solution to a combined liquidity & solvency crisis is default & devalue (cf Argentina, Iceland). The politicians have ruled this unaccpetable, but have failed to provide any other solution.Kernow Castellanhttps://www.blogger.com/profile/03365501107876860398noreply@blogger.com