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Extended Report from Danske Markets Research Euroland: Debt On A Dangerous Path
Austrians out with their perspective:
Courtesy of the Mises Institute.
A Greek Bailout Will Not Prevent a Collapse of the Euro
If the European leaders want to maintain the Euro as some chain which connects fundamentally different economies then they must learn that a chain is only as strong as its weakest link. For instance, a building isn't well protected if its security system has one flaw--say, an easily weak lock--that allows unauthorized entry, no matter how elaborate and expensive the rest of the system is. No matter how strong someone or something is strong, it is always limited by its weakest attribute. The strength of a chain is determined by its weakest link and in this case it means that if Germany will back the Greek government than the Euro should be as strong as the Greek Economy.
Why is zero hedge taking the publications of commercial banks seriously.
Sovereign debt ain't the problem - it is the implicit guarantee of the absurd commercial bond market that is putting pressure on these states finances.
Take that guarantee away from these leaches and a large section of this money/debt will be destroyed, some will survive and the rest will run towards the relative safety of Sovereigns reducing their yield.
A massive depression is inevitable - the choice is between a hyperinflationary one and a depression that will be Gigantic but may not destroy everyone .
Ah but they are trying to choose WHO to destroy.
Chaos will make choices they don't agree with.
The Athenian Gods did not have full control of events - if the present terrestrial Gods keep pushing everyone towards a hyperinflationary cliff even our masters will lose control of events.
Most of us don't want a guided tour of Hades just yet.
Coudn't agree more here You wonder who pays for this all...
Debt crisis to intensify: http://investing-info.4t.com/index.html
today gonna be a doosie
All of these publications emphasise the reduction of fiscal expenditure which will inevitably reduce the productive capacity of economies while all that unproductive rent seeking capital remains unchanged - this is mind blowing.
They expect a now poor population to pay debts that are unchanged or rising.
Being of a normally conservative nature I would normally like to compromise with these people but now after seeing the mechanism in action my solution would be burn it all except the states debt.
Destroy what is left of the commercial banks balance sheets - they no longer have a function because their capital structure did not perform as advertised.
Why are they still here , what is their function ?
Duh... To put a bid under Treasuries?
Banks do not need bondholders to buy goverment debt - they have no function because there risk seems equal to deposit holders while getting extra yield.
The retail deposit-gathering function of the TBTF zombie banks is now a de facto funding operation of the US Treasury
Anyone who doesn't understand this is living on another planet.
OK your point is.... This was the funding operation for UK banks before the securitization genie came in the early 70s and is indeed traditional European banking as I understand it.
Do you want to bring back complex financial innovation which was in reality printing counterfeit money into the system.
Both cash and long term US Treasuries are essentially the same thing - one is a bet that your country is solvent tomorrow and the other is a bet that it is solvent in lets say 30 years -
Although if you are against usury I could understand your position.
Greece doesnt even constitute a "chink" in the chain. Way to small. 2% of the EU? Who cares? Let Greece become Albania- where they belong. Greece simply does not belong in GroSSDeutscLand- culturally or economically.
Sovereign debt is not the chain mail of a modern economy - it is the blood and guts of banking , explode Greece and secondary explosions will bring down the whole debt /payment system.
kill the bank bondholders first and preserve the risk system in capitalism
I remain convinced that this debt debacle is certain slow death. It will take time, but destruction is certain. I'm also convinced that it's not decades away, either.
Thanks for all the insights, all!
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