asterisk2a + cyprus   44

The new European Union | Credit Writedowns
[ EU banking system was too big to bail in case Greece and else would default even in parts on some of its debt and or make no or delay repayment with interest in full ] In conclusion, the conditions asked of Greece are not likely to be met, because they cannot be met. Greece will be blamed for not living up to its commitments, as it has been this time around. Yet, somehow, the notion of asking for the impossible from a country that has no choice but to sign is fundamentally perverse. [...] The mistake was to break the no-bailout clause that was designed to make sure the Eurozone would not find itself in this position. For selfish reasons (i.e. preventing a bank crisis in Europe and the US), Greece was convinced to accept the first bailout in 2010.
Greece  bank  bailout  banking  crisis  bank  crisis  investment  banking  retail  banking  TBTF  too  big  to  jail  too  big  to  bail  European  Union  Positioning  ECB  Career  Politicians  lobbyist  lobby  Lobbying  crony  capitalism  corporate  scandal  austerity  accounting  scandal  bailout  bail-in  Cyprus  of  Cyprus  deposit  haircut  deposit  levy  fairness  Generationengerechtigkeit  Wall  Street  profit  maximisation  shareholder  value  economic  history  fiscal  policy  monetary  policy  Basel3  banking  fractional  reserve  banking  EuropeanSystemicRiskBoard  GFC  recovery  Debt  Super  Cycle  Privatisation  ideology  dogma  PIIGSFB  PIGS  PIIGS  France  Germany  Bundesbank  trichet  Jens  Weidmann  Angela  Merkel  Peer  Steinbrück  corruption  blackmail  josefackermann  ackermann  Deutsche  subsidies  subsidizing  Mark  Blyth  social  contract  social  tension  social  cohesion  constituency  Nationalizing  badbank  badbanks  restructuring  monetary 
october 2015 by asterisk2a
ECB 'to end Greek bank lifeline' - BBC News - Emergency Liquidity Facility (ELA) // ECB is expected to end emergency lending to Greece's banks on Sunday [...] have to "announce a bank holiday on Monday, pending introduction of capital controls". [B]ailout for heavily indebted Greece expires on Tuesday & talks have broken down. [...] "Grexit" from the euro is not inevitable, as the eurozone did resolve Cyprus's banking crisis in 2013 & the country stayed in the euro. [...] [Biggest part is EFSF debt. EU gov money (FR&GER biggest contributors) // Jens Weidmann - would have cut it earlier. Current tally €89 billion. // &! - ECB could bully/force Greece/Syriza to accept any deal given or it will cut of ELA. It did so with Cyprus & Ireland. FT called it 'the quiet enforcer.' // In the End, IMF & EFSF paid off (mostly EU) bank loans for Greece. Not to fill Greece's budget deficit. = Backdoor National Bank Bailout!!! &!
ECB  ELA  Grexit  2015  bank  run  bankrun  Troika  IMF  capital-flight  capital-controls  capital  controls  Cyprus  of  Cyprus  of  Greece  deposit  haircut  haircut  sovereign  debt  crisis  Great  Depression  austerity  fiscal  sovereignty  Syriza  democracy  Career  Politicians  European  Union  No  Representation  Angela  Merkel  MarioDraghi  Wolfgang  Schäuble  Germany  Leadership  Jens  Weidmann  zombie  banks  banking  EuropeanSystemicRiskBoard  stresstest  EFSF  bank  bailout  GFC  PIGS  IMG  ChristineLagarde  PR  public  relations  spin  doctor  media  conglomerate  manufactured  consent  banking  crisis  economic  history  fairness  public  perception  public  awareness  public  discourse  policy  folly  policy  error  toobigtofail  TBTF  too  big  to  jail  monetary  policy  unconventional  monetary  policy  crony  capitalism  Wall  Street  capitalism  Failure  recovery  monetary  transmission  mechanism  monetary  system  deflationary 
june 2015 by asterisk2a
Saxo Bank CEO On The 'Eurozone Minefield': "This Crisis Will Not Pass" | Zero Hedge
Cyprus was indeed a template for bail ins and that outright confiscatory wealth taxes, disguised as solidarity payments, could be used to raise funds. "The governments of Europe need money, and the private sector has it. It is as simple as that. Be very paranoid," he said, warning investors that the mattress may be a safer place to deposit money over the weekend than their bank accounts. "Frankly, it is a complete mess. And it is a mess that gets worse and worse every day," is how the outspoken truthiness begins, adding, "anyone with a rational view of the world now sees the currency collaboration as a historic failure that can lead to even further fatal consequences for Europe and the continent’s competitiveness vis-à-vis the rest of the world."
currency  union  2013  Politics  lostgeneration  economic  history  Europe  Saxo  Bank  unintended  consequences  Political  error  Lars  Seier  Christensen  Euro  Policy  bail-in  europeanunion  Troika  greatdepression  folly  Cyprus  NiallFerguson  greatrecession  lostdecade  folly 
may 2013 by asterisk2a
Krise in Slowenien: Angst vor der Pleite - YouTube
Lange Zeit galt Slowenien als der Musterschüler in Südosteuropa. Doch das ist Vergangenheit. Die Währungs- und Schuldenkrise erschüttert nun auch das Zwei-Millionen-Einwohnerland.
east-europe  divergence  Slovenia  trust  deposit  haircut  NPL  property  bubble  Europe  confidence  bail-in  trustagent  Troika  banking  crisis  ECB  Cyprus  deposit  levy  bank  crisis  bailout 
may 2013 by asterisk2a
The Chart Making The Fed Nervous | Zero Hedge "all too clear that part of the Dodd-Frank resolution authority guidelines, a bailout is no longer an option." Cyprus was the first, and will not be the last incident of bail-in solution for TBTF >> this whole this is a replay of Japan 90s and 2000s
monetary  policy  deposit  haircut  Europe  reflation  zombie  banks  BOE  banking  crisis  deflation  BOJ  Cyprus  deposit  levy  policy  folly  QE  SIFI  PIGS  UK  Error  bail-in  trustagent  austerity  greatdepression  zombie  consumer  inflation  expectation  deleveraging  IMF  balance  sheet  recession  GFC  monetary  theory  output-gap  haircut  derivatives  liquidity-trap  Troika  ECB  Insured  Bank  Deposits  political  folly  crisis  greatrecession  lostdecade  debtoverhang  FDIC  LTRO  OMT  Fed  trust  economic  history  confidence  sovereign  debt  crisis  ZIRP  USA  PIIGS  toobigtofail  POMO  Japan 
april 2013 by asterisk2a
Neue Steuer CD löst bundesweite Razzien aus - SPIEGEL ONLINE
tax evasion becomes less tasty. except you are a fortune 500 company and funnel your money through a dozen of mailbox companies. UK and Germany have deals with Switzerland. More to come.
offshore  banking  CaymanIslands  Cyprus  UK  Germany  taxevasion  Switzerland 
april 2013 by asterisk2a
BBC News - Cost of Cyprus bailout 'rises to 23bn euros'
The original cost of the bailout was put at 17.5bn euros. But the new total, disclosed in a document seen by news agencies, means Cyprus will have to find 13bn euros to secure 10bn euros from the European Union and the IMF. Previously it was thought that Cyprus would have to raise 7.5bn euros.
bail-in  austerity  Troika  ECB  Cyprus  European  Commission  IMF 
april 2013 by asterisk2a
Cyprus Suspends Probe Into Who Withdrew Money Early | Zero Hedge
In a day full of stunners, we next get news from Cyprus, where a few weeks after the start of the "investigation" into who pulled their cash out of the country's doomed banking system in advance of the confiscation news on March 16 (and where even the current president was implicated in transferring over €20 milion in family money to London) the parliamentary committee tasked with tracking down the leaks, has suspended its probe. >> + >> + in reality plans continue to push ahead to indeed 'legalize' bail-in template from Cyprus
Politics  deposit  haircut  capital  controls  Europe  haircut  accountability  European  Commission  transparency  Troika  banking  crisis  ECB  Cyprus  bankrun  deposit  levy  bank  crisis  trust  economic  history  PIGS  confidence  Laiki  sovereign  debt  crisis  trustagent  bail-in  offshore  banking  austerity  capital  flight  PIIGS  corruption  of  Cyprus  IMF 
april 2013 by asterisk2a
Interview with German Economist Peter Bofinger on Perils of Cyprus Bailout - SPIEGEL ONLINE
>> with the example of Cyprus - people having bank accounts @PIGS and or living there - will withdraw money, once the crisis intensifies again. History doesn't repeat, but it rhymes. Italy put a on-off bank levy of 0.6% in 1992 on bank accounts. They called it "solidarity levy." > > "the whole Euro periphery is scared to death, since the Cyprus levy crushed the taboo of hitting bank depositors with losses." [What next!?] > "The price is a deeply socially-damaging one." >>
deposit  haircut  trust  economic  history  Europe  haircut  confidence  unintended  consequences  sovereign  debt  crisis  bail-in  history  trustagent  PIIGS  banking  crisis  Cyprus  bankrun  deposit  levy  bank  crisis 
april 2013 by asterisk2a
The Next Domino: Australia Doubles Tax On Retirement Savings | Zero Hedge
How much do you trust your government? >> Portugal, Ireland, Hungary & Co. raiding savings of ordinary people. raiding long-term funds for short-term holes. Promises are there to be broken. Laws to be rewritten. >> BOJ putting a tax in form of currency debasement (forced inflation / debt monetization) on its savers and pensioners. >> the problem with current form of democracy is - the short-term thinking that went on for 70 years.
currency  debasement  Politics  Europe  transferring-wealth  pension  scheme  IRA  BOJ  political  folly  Cyprus  Australia  democracy  greatrecession  lostdecade  policy  folly  JGB  middleclass  2013  lostgeneration  short-term  thinking  trust  pension  fund  working  poor  confidence  wealth  management  Error  401k  bail-in  trustagent  austerity  middle  class  USA  PIIGS  greatdepression  pension 
april 2013 by asterisk2a
Texas Wants Its Gold Back - YouTube
Texas State, introduces legislation that State Gov can't seize its Gold. Also plans to relocate its Gold from NYFed to Texas. Germany already announces (via Bundesbank) that its Gold (held @ NY Fed) will be shipped to the Bundebank. All is the same tone of Cyprus bail-in.
bail-in  currency  debasement  economic  history  Cyprus  currency-war  Gold  Bundesbank 
april 2013 by asterisk2a
Steuerparadies: Zypern ist überall - YouTube
- Europe got half a dozen low tax countries, which people with money and corporations use. Europe is one big mess. Tax policy across Europe is one.
Politics  economic  history  Europe  Laiki  Bank  taxevasion  Policy  Error  bail-in  offshore  banking  Troika  banking  crisis  Cyprus  political  folly  Bank  of  Cyprus  crisis  folly 
april 2013 by asterisk2a
Folgen des Zehn-Milliarden-Euro-Kredits: Zyperns gefährlicher Sparkurs - SPIEGEL ONLINE
Zwangsabgabe auf Bankguthaben, Stellenstreichungen, Privatisierungen, Steuererhöhungen: Zypern muss für einen Zehn-Milliarden-Euro-Kredit ein hartes Sparpaket umsetzen. Experten befürchten, dass die Maßnahmen die Wirtschaft endgültig in den Abgrund treiben.
bail-in  austerity  Troika  Cyprus  bailout 
april 2013 by asterisk2a
Krise in Zypern: Das flüchtige Geld der Sparer - SPIEGEL ONLINE
Das System basiert auf dem Glauben an den Wert des Geldes Ein schmerzhafter Weckruf, der zeigt: Formal gesehen sind die Bankkunden, die ihr Geld auf einem Giro- oder Sparkonto horten, Gläubiger ihrer Bank. Wenn ein Finanzinstitut pleitegeht, ist somit mindestens ein Teil des Geldes weg - es sei denn, ein privates oder staatliches Sicherungssystem steht dafür ein. Das Vertrauen, dass diese Systeme im Zweifelsfall auch halten werden, hat in der vergangenen Woche einen Knacks bekommen.
fiatmoney  communication  fiat  currency  trust  Europe  confidence  unintended  consequences  Laiki  Bank  zombie  banks  sovereign  debt  crisis  wealth  management  bail-in  trustagent  Troika  fiat  money  banking  crisis  deleveraging  Cyprus  Bank  of  Cyprus  crisis  balance  sheet  recession 
march 2013 by asterisk2a
Eurogroup’s Dijsselbloem Says "Banks Should Save Themselves" | Zero Hedge
"all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realize that it may also hurt them," [...] While this is upsetting to markets - so used to the visible hand of central planning saving themfrom themselves - this is very positive step for 'real people' as taxpayers appear to be 'off the hook' and the responsible parties beginning to be punished. >>
bail-in  banking  crisis  Cyprus  bank  crisis  Europe  haircut  zombie  banks  zombi  banks 
march 2013 by asterisk2a
Mainstream Media Says Cyprus Salvaged By EU Deal, I Say Cyprus Is Sacrificed By Said Deal - Thrown Into Depression | Zero Hedge
“Policy makers’ recent decisions raise the risk of deposit outflows, capital flight, increased bank and sovereign funding costs and broader financial-market dislocation throughout the euro area in the future,” Moody’s said. >> >> :: Depression for Cyprus: Our Cypriot GDP forecast entails a drop of just over 20% in real GDP by 2017. This forecast had already factored in much what was agreed, but did not account for the additional uncertainty shock generated by the past week’s appalling political mess. > > >
Laiki  Wolfgang  Schäuble  Politics  unintended  consequences  Toika  Policy  Error  bail-in  ELA  blackswan  ECB  Cyprus  Bank  of  Cyprus  Russia  Germany  bailout  folly 
march 2013 by asterisk2a
Keep A Close Eye On This FX Pair | Zero Hedge
Wondering why the Euro is losing steam so quickly this morning after the Eurogroup 'saved' Cyprus? Perhaps this FX cross is the reason... >> unintended consequences :: Russian Oligarchs pulling money out of Europe.   Perhaps this is why Italian and Spanish financials and bonds are weaker... >> >> "" accounts with more than 100,000 euros, face losses of 4.2 billion euros. "" And now, the scramble to pull uninsured deposits out of banks everywhere begins. "" !!!
Laiki  ESM  EFSF  trust  bank  restructuring  haircut  confidence  unintended  consequences  European  Commission  zombie  banks  trustagent  bail-in  Troika  ELA  ECB  restructuring  Cyprus  of  Cyprus  bank  crisis  toobigtofail  Russia  zombi  banks  bailout 
march 2013 by asterisk2a
Audioboo / What are the implications of the Cyprus deal? Laiki bank will be fully resolved – it will be split into a good bank and bad bank. The good bank will merge with the Bank of Cyprus (which will also take on Laiki’s circa €8bn Emergency Liquidity Assistance – a last-resort funding system outside the usual ECB operations). The bad bank will be wound down over time with all uninsured depositors (over €100,000) taking significant losses (no percentage yet but some could lose all their money above the threshold). >> Germany has made it clear that it is no longer willing to foot the bill for extensive bailouts without the recipient country taking a share of the burden and making some radical changes.
angelamerkel  Wolfgang  Schäuble  Europe  unintended  consequences  taxevasion  European  Commission  Laiki  Bank  sovereign  debt  crisis  bail-in  offshore  banking  Troika  ELA  banking  crisis  ECB  Cyprus  crisis  Bank  of  Cyprus  Germany  democracy  bailout  IMF 
march 2013 by asterisk2a
Zypern-Krise: Merkel erhöht den Druck - SPIEGEL ONLINE
Den findet die Bundesregierung inakzeptabel, genau wie wohl auch die Troika aus EU-Kommission, Europäischer Zentralbank (EZB) und Internationalem Währungsfonds (IWF). Und jetzt? "Ich wünsche mir nicht, dass es zu einem Crash kommt", wird die Kanzlerin bei den Liberalen zitiert. Das darf man glauben, Merkel hat immer vor Dominoeffekten in der Euro-Zone im Falle einer Staatspleite gewarnt. Und doch: Ausgeschlossen wird ein Zypern-Bankrott in der Koalition nicht mehr.
ESM  angelamerkel  Politics  European  Commission  Policy  Error  Troika  ECB  Cyprus  political  folly  Germany  bailout  IMF  folly 
march 2013 by asterisk2a
The euro-zone crisis: Just when you thought it was safe… | The Economist
Bailing out Cyprus was always going to be tricky. But it didn’t have to be like this. The euro was supposed to be the manifestation of a grand political project. It feels more like a loveless marriage, in which the cost of breaking up is the only thing keeping the partners together.
Cyprus  bailout 
march 2013 by asterisk2a
ECB Re-Bluffs To Cyprus Bluff, Is "Prepared To Let Cyprus Go" | Zero Hedge
And to think: so much pain and confusion over what CNBC can't stop repeating is nothing but a tiny, little country. Tiny... maybe. But the precedent it will set may well be of Archduke Ferdinandian size.
contagion  OMT  monetary  policy  monetary  theory  modern  monetary  theory  MarioDraghi  unintended  consequences  sovereign  debt  crisis  Euro  Troika  PIIGS  banking  crisis  ECB  Cyprus  bank  crisis  zombi  banks  bailout  IMF 
march 2013 by asterisk2a
Next: Capital Controls | Zero Hedge
That is precisely the Pandora's box that Europe has now opened, and which it is scrambling to close. How? With the dreaded "contingency plans", among which are such last ditch efforts as capital controls, including "imposing limits on daily withdrawals from bank accounts; capping the amount of money that can be electronically taken out of the country and making these transactions slower to clear; and introducing border checks to cap the amount of cash leaving in the country," most recently utilized in the banana-est of republics such as Argentina. + LEVY ON DEPOSITS "This is an unprecedented assault on individual property rights and every individual in the developed world should take notice, and far from stabilising the eurozone, the bail-out likely heightens contagion risk across the EU."
capital-controls  contagion  ESM  trust  economic  history  Europe  confidence  unintended  consequences  trustagent  PIIGS  Cyprus  politcal  folly  bankrun  capital-flight  policy  folly  IMF  bailout 
march 2013 by asterisk2a
S.P.O.N. - Die Spur des Geldes: Hilfe durch Staatsbankrott - SPIEGEL ONLINE
Doch es war Schäubles Ministerium, das die Vermögensabgabe überhaupt ins Spiel brachte. >> Initially 40%, IMF was for it too. Die zyprischen Banken brauchen Kapital, keinen Kredit. > > "And Moscow protested loudly when some European leaders wanted to levy stiff taxes on Cypriot bank accounts, a plan that now has been scuppered. [...] “the governments of other European member states are driving the government of Cyprus to seek help from Russia. This is a disaster for the EU. How European leaders handle Cyprus indicates whether the European project and the euro area can lead and prosper.”
ESM  Wolfgang  Schäuble  economic  history  Europe  Laiki  Bank  Troika  banking  crisis  Cyprus  crisis  Bank  of  Cyprus  Russia  Germany  IMF  bailout 
march 2013 by asterisk2a
Zypern-Krise: Wie sich das Land seinen Banken ausgeliefert hat - SPIEGEL ONLINE
Zypern steht vor dem Staatsbankrott, schuld sind vor allem die Banken. Jahrelang profitierte das Land von seinem überdimensionierten Finanzsektor, nun müssten die beiden größten Institute dringend abgewickelt werden. Doch die Regierung in Nikosia schreckt davor zurück - aus einem einzigen Grund. [...] Die Banken sind das eigentliche Problem Zyperns. Völlig überdimensioniert, vollgepumpt mit griechischen Staatsanleihen, de facto schon jetzt pleite. >> " Pimco glaube, dass es sich bei der Zwangsabgabe nicht nur um einen politischen Fehler der Euro-Retter handle. Stattdessen zeige das Hilfspaket, dass "der Euro weit davon entfernt ist, eine perfekte Reservewährung zu sein". >
PIMCO  contagion  ESM  Political  Folly  trust  economic  history  Europe  confidence  unintended  consequences  zombie  banks  Laiki  Bank  sovereign  debt  crisis  cyprus  trustagent  BIS  PIIGS  banking  crisis  ECB  bankruptcy  Bank  of  crisis  IMF  bailout  policy 
march 2013 by asterisk2a
"All The Conditions For A Total Disaster Are In Place" | Zero Hedge
We are now witnessing another radical change as a perfectly reasonable deposit guarantee is being undermined. Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors. [...] Under the less benign scenario: We will have a full-fledged bank run as soon as the corralito is lifted.
corralito  2013  Politics  economic  history  Europe  unintended  consequences  sovereign  debt  crisis  PIIGS  banking  crisis  ECB  political  folly  Cyprus  bankrun  bank  crisis  Germany  policy  folly  IMF  bailout 
march 2013 by asterisk2a
Saxo Bank CEO: "This Is Full-Blown Socialism And I Still Can't Believe It Happened" | Zero Hedge
This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. [...] Depositors in other prospective bailout countries must be running scared - is it safe to keep money in an Italian, Spanish or Greek bank any more? [...] This is a major, MAJOR game changer and the fallout will be with us for a long time to come. [...] Market reaction? it must be very good for gold - and for safe-haven countries like Switzerland, Singapore [...] This is full-blown socialism and I still cannot believe this really happened. >>> >> >>
ESM  PIIGS  banking  crisis  2013  Politics  Cyprus  bankrun  bank  crisis  Europe  sovereign  debt  crisis  bailout  IMF 
march 2013 by asterisk2a
For Everyone Shocked By What Just Happened... And Why This Is Just The Beginning | Zero Hedge
Today, lots of people woke up in shock and horror to what happened in Cyprus: a forced capital reallocation mandated by political elites under the guise of an "equity investment" in insolvent banks, which is really code for a "coercive, mandatory wealth tax." If less concerned about political correctness, one could say that what just happened was daylight robbery from savers to banks and the status quo. These same people may be even more shocked to learn that today's Cypriot "resolution" is merely the first of many such coercive interventions into personal wealth, first in Europe, and then everywhere else. [...] And with inflation woefully late in appearing and "inflating away" said debt overhang, Europe first is finally moving to Plan B, and is using Cyrprus as its Guniea Pig.
debtoverhang  ESM  2013  Politics  debt  jubilee  financial  repression  economic  history  Europe  reflation  debt  bubble  sovereign  debt  crisis  PIIGS  greatdepression  deflation  debt  restructuring  Cyprus  inflation  greatrecession  bailout  IMF  balance  sheet  recession 
march 2013 by asterisk2a
JPMorgan Asks "Has Europe Bazookaed Itself In The Foot", Answers "Yes" | Zero Hedge
It is difficult to over-state the extent of popular anger in Cyprus over the bailout deal which was pulled together on Friday evening. --- - >> “If tomorrow Cyprus’s Parliament rejects the bill, Cyprus opens the road to chaos,” said Afxentis Afxentiou, who was governor of the Central Bank of Cyprus from 1982 until 2002, said on CYBC. If the bill is rejected, “Cyprus will turn into Libya. Even with the pain, we need to follow a normal course, with hope we’ll see better days.” >> -
Cyprus  bailout 
march 2013 by asterisk2a
Zypern muss auf Druck der Euro-Staaten seine Bankkunden teilenteignen - SPIEGEL ONLINE
Es geht um Gerechtigkeit, aber auch um Pragmatismus: Zypern muss die Bankkunden des Landes teilenteignen, um die Schulden des Landes zu lindern. Ein richtiger Schritt. Jetzt beginnt Phase vier der Euro-Krise. >>
Cyprus  bailout 
march 2013 by asterisk2a
Quote Of The Day: "That Was Not A Joke" | ZeroHedge
Question: Is the goal still to get Greece's debt to 120%?
Juncker: The fact is that the target of 120% will remain, but the target as far as the time frame is concerned has been postponed to 2022.
[Laughter in the room]
Juncker: That was not a joke!
sovereign  debt  crisis  Germany  greatrecession  2012  Cyprus  IMF  Europe  PIIGS  Greece 
november 2012 by asterisk2a
BBC News - Cyprus to ask for bailout from eurozone partners
The country needs to find about 1.8bn euros over the next few days to recapitalise its second largest lender, Cyprus Popular Bank.


The country has already borrowed 2.5bn euros from Russia, whose business people are important customers of Cyprus's relatively large offshore financial sector which offers low tax rates.

The BBC's chief economics correspondent Hugh Pym described Cyprus' problems as "classic contagion".


Credit ratings agency Fitch said the country, which has a population of one million, would need 4bn euros to support its banks, the equivalent of almost a quarter of its GDP, or economic output, last year.
banking  crisis  bailout  contagion  sovereign  debt  crisis  PIIGS  2012  Cyprus 
june 2012 by asterisk2a
All the bail-out systems under the sun cannot make the eurozone work - Telegraph
Their costs are 30-40pc out of line with Germany's. It is a fantasy to believe that such a gap can be closed by "reform". Whereas money values can move up with dazzling speed, the real economy can be improved only slowly.
Consequently, when nominal values get out of line, the problem can only be solved by a price or exchange rate adjustment. Theoretically, this could be through internal deflation but that would increase the real value of debt and depress aggregate demand still more. Deflation is the road to catastrophe.

Throwing yet more money at the vulnerable countries and calling this by a fancy name is not an answer. Just as with the Gold Standard and with Bretton Woods, the system has to break.

There will be more summits and bail-outs, more fudge and mudge, and more money poured into a black hole. But the end is approaching inexorably.

Roger Bootle is managing director of Capital Economics.
bailout  2012  Grexit  default  scenario  default  economic  history  brettonwoods  goldstandard  sovereign  debt  crisis  Europe  EMU  Cyprus  PIIGSFB  PIIGS 
june 2012 by asterisk2a

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