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Short
& sweet tonight. Nobel Prize-winning economist Joseph
Stiglitz talks with Bloomberg's Francine Lacqua about Greece's debt
problem and China's currency. Stiglitz said an International
Monetary Fund rescue of Greece would be a "sad" chapter in the history
of the European Union.
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I agree with the Dork of Cork's comment. The EU was always a common market. The political integration was never in the cards. Going forward, the only way to promote a political integration is through the action plans implemented after a sovereign default.
Are you saying TPTB are using the default of Greece and other nations as an opprotunity to actually strengthen the EU?
It is just a theory but the apparent equality of government paper with bank paper is disturbing to me - the ECB concentration on fiscal deficits was at least respected in Europe if not fully obeyed within the EU , indeed with the exception of Greece the Peripheral countries had very low or zero fiscal deficits.
This forced German savings into bank vehicles which created the catastrophic bubbles which the ECB ignored.
This concentration on the 3% deficit rule had the unfortunate consequence of reducing the power of European governments to just local vassal states under the control of banking interests.
The traditional Republican French resistance to the ECBs fiscal rule was based on the understanding their government would be reduced to the point of irrelevance.
The ECBs attack on Greece may be based on that countries willingness to create government money at the expense of other interests.
I say this as Ireland's economic situation and external debt is far worse yet we are being protected to some extent from attack by being good boys.
We are contracting government money on a relative basis to protect bank debt - the Greeks may be resisting this and are now paying the price.
I think Merkel has to appear has defender of German State interests to carry the population in whatever direction she wants to go into the future.
She will become the Margret Thatcher of German Politics - once she breaks what the population believes are the enemies of the state she will have a huge amount of political capital.
remember over the Thatcher years the British State was effectively dismantled with savage cuts in defence spending , privatisation of strategic interests such as the defence research establishment(completed over the Blair years) and utilities run down to minimum standards - her vision was finally completed by the left of British Politics which financialised systems that the Tory's could never get away with.
Now getting back to Merkel - her breaking of a nations sovereign debt while at the same time as keeping a nation within the present euro currency area will have huge consequences for the remaining sovereignty of nation states within the Euro area.
The sovereign paper will be equal or even less secure then bank bond assets / liabilities.
European governments will lose the rest of their power and become redundant as they will not be able to raise money for their populations.
Even Germany will lose its distinction as being a separate country over time - Merkel voters who believed they were being patriotic will now be dead or retired and wonder why their country has gone to the dogs , little would they know that they voted for such a turn of events.
Then the ECB will then have complete control over their subjects.
Bloomberg reports that Germany is prepared to give Greece loans at below-market interest rates, dropping its opposition to aid subsidies in a compromise over the terms of a lifeline for the debt-stricken nation, a European government official said.
Yeah, another 'government official' says and how many times has that 'news' been reported.
I don't doubt something will be cobbled together, something has to be done, but it won't work unless, somehow, real austerity is enforced and I don't see how any Greek government can do that and survive.
Default and a Euro exit seems to me to be the better choice for all concerned, at least better than a crushing deflation and depression for Greece. The political project of European integration that the EuroElites are so enamored of and derive their sinecures from may come to a halt but tying Southern Europe into a currency/customs union with Germany and other Northern European economies is unworkable.
Yesterday on France 24 Live from Paris - the premier international French channel a French economist stated that Greece should default on its debt.
Unfortunately I did not get his name but this guy was on his own and I got the impression that the French State was accepting a loss on its Greek Paper.
It looks like Greece is now in a unofficial state of bankruptcy.
Given the unusual nature of the ECB and its non state characteristics the following scenario could play out.
Greece defaults on its international debts , it remains in the Euro and subsequently raises more money but at a much lower volume.
Its economy goes into depression not unlike Ireland but possibly much worse as its money supply is now a fraction of what it was.
The other PIG nations can no longer raise the same amount of money on the debt markets but this Greek shock provides the local governments of the PIGS nations with a justification for a shock austerity programme involving huge cuts.
If this programme becomes politically feasible the Euro then surges in value to become effectively the dominant currency on the Planet.
The Dollar subsequently enters its final hyperinflationary stage.
jct is the ultimate bankster.
just look at his record.
just look at his face.
Obviously what these clowns are banking on is worldwide "austerity" to help appease the markets and keep rates low. We see how that worked out for Greece.
OK. "Soros Conference on New Economics"
Huh? Soros, who ran out the BOE, a one world totalitarian "collectivist"?
What exactly are these New Economy conferees attempting at the Cambridge confab?
I will guess: the great leveling, starting with that big bad boy, USA.
The Program:
http://ineteconomics.org/blog/inet-press-release-march-26-2010
-Where are we now? Debt, Deficits, and Global Financial Stability
-1930 and the Challenge of the Depression for Economic Thinking: Friedrich Hayek versus John Maynard Keynes
-Anatomy of Crisis – The Living History of the Last 30 years: Economic Theory, Politics and Policy
-Has the Efficient Market Hypothesis Led to the Crisis? Collapsed with The Crisis?
-Networks and Systemic Risks
-What Kind of Theory to Guide Reform and Restructuring of the Financial and Non-Financial Sectors?
-Toward a New Global Financial Architecture
-How Empirical Evidence Does or Does Not Influence Economic Thinking and
Theory: Calibration, Statistical Inference, and Structural Change
-Mathematical Models: Rigorously Testable, Qualitative Metaphors, or Simply an
Entry Barrier
-The Consequences of Inequality and Wealth Distribution
-Political Economy: What Can Government Do? What Will Government Do?
The Nobel is clearly now a completely vacuous award devoid of all semblance of actual merit.
Once Arafat won the Peace Prize I no longer cared what the Nobel committee said about anything.
This isn't pointed out often enough: there is no Nobel Prize in economics; the "prize" won by Stiglitz and Krugman is a sham created by Sweden's central bank and deliberately positioned to bamboozle the public into thinking it's part of the REAL Nobel Prizes.
Under current circumstances, the irony of this has never been more intense.
http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences#C...
very true, but the "real" Nobel Peace Prize somewhat relativizes the ridiculousness...
The crazy is Stiglitz. What an asshole.
How did this guy win a nobel prize? Blaming Germany for the current situation is absurd. Germany's mistake was allowing Greece to lie about its economy in order to get into the eurozone.
The IMF (actually US taxpayers) will bail out Greece and Greece will do nothing to change its habits and eventually default on the IMF loan handing the US taxpayer one more bailout to put on their backs. No more bailouts!
Stiglitz is a tosser of the first water and a media whore to boot.
There is no real Nobel price in economics anyway, it's as fake as the whole economy !
Do your research !
+1.
Very important in this election to let our representatives know that we won't accept US taxpayer dollars funding IMF bailouts of foreign banks.
I think you answered the question. You don't get Nobel prizes if you believe in human nature or the Austrian school. Think "Fantasy Island" and you might begin to understand it.
F.A. Hayek got one, though. (albeit early in the prize's history and much to the dismay of one Gunnar Myrdal)
Think Obama "peace" prize.
Stiglitz thinks the markets are "mad" and "crazy" because the markets charge Greece 7% for money today. Brazil is paying 12% for money. So Greece has it cheap.
I wonder what Stiglitz will say when the US pays 7%. "Those darn crazy markets."
These guys don't get it. The current model does not work unless interest rates are near zero. Anthing close to a return to normal interest rates and eveyone is dead. Stiglitz is supposed to be one of the smartest guys around. They have no clue. How scary is that?
Brazil is paying the 12% and in an appreciating currency.
And a booming economy.
The average human considers whatever has been happening in the last year or less to be "normal." Or even worse, westerners believe "normal" markets to gain 10-15% per year and mortgage rates should be less than 6%, not so much because that is what they are used to, but because that is what they want. Crash 1.0 was only a year and a half ago but most people have already forgotten. Too bad there are not more old folks who lived through the depression to offer guidance. I remember my grandmother lived most of her life afraid of the stock market because it was so volatile.
+100, Bruce.
Yes, judging by the statements of Greek and EU government ministers, it's clearly the sanity of the market that is in question.
Brazil is paying the 12% and in an appreciating currency.
The Aussie 10 yr rate is 5.8%.
Kinda interesting when the stronger currencies have higher inflation and higher interest rates.
Not the way it's supposed to work but why fight it?
The Germans were able to witness the results of the US bailout of AIG and have a good idea of where the money went. I expect they are very happy that it was the US treasury that sent out the money and not them. Of course the result was that their banks were among the major beneficiaries. Why not let some one else do the lifting again? It worked last time and the IMF seems determined to get into the deal. Just as with the several defense efforts, the Germans will be right behind the US.
by Augustus
on Fri, 04/09/2010 - 21:24
#294116
The Germans were able to witness the results of the US bailout of AIG and have a good idea of where the money went. I expect they are very happy that it was the US treasury that sent out the money and not them. Of course the result was that their banks were among the major beneficiaries. Why not let some one else do the lifting again? It worked last time and the IMF seems determined to get into the deal. Just as with the several defense efforts, the Germans will be right behind the US.
Augustus,
Separatist Germany? I have heard this before? I have read something somewhere? I am having trouble putting my finger on it? De-Stabilize Europe? and let protectionism reign…. It’s right there at my finger tips but just out of reach… what could it be reminding me of?
Let me know if it has a familiar ring to you, would you?
Thanks, JW
Augustus,
I am fairly sure that the German Joe Sixpack has no clue what happened during the financial crisis. When it happened there was no reporting in the mainstream media, then after a run to cash machines that would have emptied the supply of bank notes in a week or so was a speech of the German chancellor Merkel that money in the bank is guaranteed federally; in other words I guarantee my savings with my tax Euros. Total bullsh1t, but it worked. Two weeks later the parliament approved a rescue package for the banks that turned out to be 500 billion Euros of guarantees for junk paper and several billion of direct subsidies. After it happened the news disappeared quickly out of the media.
The German banks lost quite a bit of the money with AAA-rated US paper that turned out to be not worth that much.
The million dollar question, when is the current US bubble set to pop?
-November? Around election time perhaps?
Answer: 2012
A full presidential term will have to be served. Obama being the sacrificial lamb for TPTB. His usefulness will have been extinguished so we can have another presidential selection come to office to supposedly "clean up the mess". Then things get down right scary about the person who could "do the job". I tend to think it will be a name that is not familiar today. Think about it.
The EU is sad. But what modern nation state is not? We are a world of little integrity with socio-economic structures built on promises. Any 10 year old can see the global FAIL coming.
Europe may be "sad" but Stiglitz is as happy as a clam.
Did you ever see an economist so animated, so giddy, with such a big smile on his face as Stiglitz face-to-face with Francine Lacqua (at 0:12-0.15 sec; 1:07-1:18 sec; etc.) (and his hands floating before Francine's breasts at 2:00-2:10 sec).
Responding to disgruntled reporters (from WSJ, Reuters, Economist, etc.) excluded from his interview with Francine, the Nobel laureate Stiglitz replied:
There ain't nothing in the world
Like a big eyed girl to make me act so funny make me spend my money
Make me fool real loose like a long necked goose
Like a girl oh baby that's what I like
http://www.youtube.com/watch?v=kLpHocRHwYk
It's sad, but Germany is wanting them to go to the IMF. Also Germany and France knows that the other PIIGS are waiting on the sidelines to get bailed out also.
Not many here on ZH seem to realize that Germany HAS to bring down the Euro, at all cost. Merkel is a master manipulator, she plays the Piigs to here advantage to make Germans exports competitive again. And she is on to win that game.
Not sad at all as i recall France has a lot of debt (junk) from Greece and they sure want the IMF/USA money to pay them out (the same way the vampire squid Goldman Sachs got paid from AIG). As for Germany, they are far too wise to bail out a failed nation that has no hope of a real recovery.
Only a fool would give Greece any money, and so the Fedeal Reserve/IMF will of course be more than happy to fill that role.