Leading economist Kenneth Rogoff talking about Greece on BBC Hardtalk:
“I don't think there is any question that if you look at it narrowly from Greece's point of view, it would be better to default now, clean it up and move on. Yes, it is painful to default, but countries grow afterwards and many countries have done it and done very well. The problem here is that Europe can't handle it so easily because Portugal is weak, Ireland is weak, the banking system is weak. And in essence what's happening is that Europe is bribing Greece not to default. They are giving them lots of money. Greeks aren't paying now, they are getting new money”.Ambrose Evans-Pritchard (back with a vengeance) writing in the Telegraph on the EU and credit rating agencies:
“The EU authorities are attempting to muzzle free opinion, first by threatening Fitch, Moody’s, and S&P with vague retribution, and then by drafting restrictive laws to prevent them from publishing unwelcome messages.”Nick Malkoutzis in Greek paper Kathimerini highlights the coming pain for Greece under the second bailout agreement:
“Now, if the EU institutions wish to avoid being held hostage by the robber agencies they should stop using the ratings as a basis for lending collateral at the ECB. They should create their own more rigorous method of assessing credit-worthiness, ignore the agencies altogether, and make their case directly to global investors…What the EU should not do is try to muzzle free opinion, or free speech. We are on a slippery slope.”
“Like a Hollywood sequel which follows a dire original, Memorandum II is likely to make us want to look away in horror.”Just snippets of some good pieces, we recommend reading/listening to them all in their entirety.
“But as we move from Memorandum I to its potentially scarier successor, it still doesn’t appear to have sunk in either at home or in Brussels, Frankfurt and Washington, where the decision makers of the European Commission, European Central Bank and the International Monetary Fund reside, that all the slashing of public expenditure and hiking of taxes is not going to solve Greece’s problems."
Jean-Claude Piris is legal counsel of the European Council and the Council of the European Union, director general of the legal service of the Kouncil
ReplyDeleteHe writes:
There is an obvious link between the economic and monetary parts, if one wants to be sure that the currency will remain stable while allowing reasonable economic growth. (1)
As long as the bXXXXXXs think there is an opposition between stable currency and "reasonable"economic growth, euroland is doomed.
FreeGold means that the euro has a gold component and a paper component, and puts a “firewall” between the two so that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the (quarterly) marking to market (MTM) of the gold reserves of the European System of Central banks , not to the model of $42.2 like the USA central bank (originally $35), by the ESCB which provides that wall.
Euro and Freegold are coexisting to supplement each other, without interacting with each other. That’s how the polity achieves its democratic legitimacy. Just like Charles-Louis de Secondat, baron de La Brède et de Montesquieu (1689 – 1755), divided government power into three branches and called his idea the "separation of powers", so does Freegold separate the gold component and paper component of the currency. Whereas Montesquieu freaks have never been able to find a way to make sure that the separation of powers is not being violated the MTM-firewall guarantees that the separation is not a vain word.
Gold is a remnant of supernovas that occurred before our solar system was born.
(Stephen Hawking, "A Briefer History of Time", Bantam Books, 2005, p. 83)
Every primary cause infuses its effect more powerfully than does a universal second cause
This means that when the alleged causes of a phenomenon stop existing or stop their effect, the real causes continue their effect. (Adriaan Pattin, De hiërarchie van het zijnde in het "Liber de Causis" , Tijdschrift voor Filosofie 23 (1961), 130, p. 140
Try explaining that to Piris who’s not only a lawyer, but also a bureaucrat.
NOTE
(1)
Jean-Claude Piris " Where Will the Lisbon Treaty Lead us?": in; Anthony Arnull, Catherine Barnard, Michael Dougan, and, Eleanor Spaventa, (eds.), "A Constitutional Order of States -Essays in EU Law in Honour of Alan Dashwood", Oxford and Portland, Oregon, Hart Publishing, 2011, 39, p. 67
If Moody's wont come up with the right ratings then the EU will create an agency that does.
ReplyDeleteOf course, the EU has form in this regard - wrong referedum result? Vote again!
Don't like what the CDS market is telling you? Ban the market!
Short sellers supressing your banks' shares? Ban it!
The ruling class embraces the EU, the source of so many of our problems. It uses the debt crisis to move the EU towards full economic and political union. It imposes sanctions on Portugal, Ireland, Greece and Britain. This is economic warfare – youth unemployment is 20 per cent here, 40 per cent in Greece and 45 per cent in Spain.
ReplyDeleteThe EU stops countries devaluing. It forces on them bailouts that don’t work, it drives them deeper into debt holes, then tells them to carry on digging.
Last year’s bailout of Greece cost 110 billion euros. It failed. This year’s will cost another 120 billion euros. One definition of insanity is to do the same thing and expect a different result. Default is not if but when, and the Greek people have to choose to get out of the euro.
The government doubles our payments to the International Monetary Fund to £20 billion, not to save Portugal, Greece and Ireland but to save the euro, to save the EU. Excessive loans at low interest rates in a currency you do not control lead inevitably to defaults. Don’t pay the debts; don’t enrich the bankers.
Argentina’s default in 2001 was the biggest in history. “So successful did its default prove (economic growth has since surged …) that many economists were left to ponder why any sovereign debtor ever honours its commitments to foreign bondholders.” Who says? Would you believe, Thatcherite Niall Ferguson, of all people. Default is good for us.
Again, the City of London’s tame journal City A.M. says, “the Icelandics couldn’t afford to bail out their bondholders – so they put their taxpayers first, only guaranteed the deposits of their own citizens and allowed everything else to go bust in 2008. It was painful – especially for foreign customers of their banks, including in the UK – … but in the end it has worked for Iceland. Sometimes it makes sense to give up and move on.” Of course, at the time, City A.M. screamed that it was the end of civilisation as we know it.
Bondholder, creditor-friendly policies are crippling the economy. The government protects the rentiers from any losses, which inflicts much larger losses on everyone else.
The monster that wrecked a continent is in deep crisis right now – the euro and the borderless Schengen agreement is in ruins, Strauss-Kahn implodes. Yet it is good for some – there are more Greek, Spanish and Italian millionaires than ever and they buy houses here in London, which forces up house prices.
The EU encourages immigrants from all over the world, who arrive here via Italy, which grants residency so easily – it is the EU’s weakest link. The UK Borders Agency admits that immigration is out of control.
In 2002 there were 4,000 workers from the 8 eastern or central European countries, which joined the EU in 2004, now 235,000. The coalition, like Labour, encourages the inflow of these workers, to keep wages down.
Ambrose E-P talks about a 'slippery slope'. I'm afraid it's inevitable that institutions so lacking in the balance of democratic accountability will, sooner or later, end up on that slope.
ReplyDeleteIt seems to me that there are very many signs now that the EU is heading down that unfortunate path and it's time Europeans woke up to the sinister direction in which the EU is taking our continent.
Let's hope Greece sets change in motion, for her own good, as well as Europe's.