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A Cacophony Of Discord, Defaults, And Visions Of Impossibility

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Wolf Richter   www.testosteronepit.com

The Eurozone wasn’t supposed to be a house of cards. And as long as there was “confidence” that it would work, it worked: the financial markets offered cheap no-questions-asked loans to the most profligate governments, and even tiny countries like Cyprus were able to suck up and disperse in record time phenomenal amounts of money. The elites got immensely rich, and even other members of society were able to pick up some crumbs. But all that remains from this drunken frenzy are mountains of decomposing debt—and a cacophony of discord, shouting matches about defaults, and visions of impossibility. Former taboos are violated, sacred cows are slaughtered, and the euro has been tossed on the chopping block.

There was billionaire Frank Stronach who’d announced he’d start an anti-euro political party in Austria. While the European Union should guarantee peace and the free movement of goods, people, services, and capital, he said, it could only function “if every country has its own currency.” He called the ESM, the not yet existing bailout fund that is supposed to save the Eurozone but is still hung up in the German Constitutional Court, “insolvency procrastination.” And he exhorted Austrians to ditch the euro [read.... The Euro Revolt Spreads To Austria].

Austrian Foreign Minister Michael Spindelegger (ÖVP) would take the opposite tack. Worried about exports—half the jobs in Austria depended on them—he’d rather not get rid of the euro. Instead, “We need possibilities to kick someone out of the monetary union,” he said, particularly “countries that don’t stick to their commitments.” And he jabbed at Greece because it had lied about its numbers in order to be allowed into the Eurozone.

Alas, being able to kick a country out would require treaty changes, which would take five years, Spindelegger said. But he’d already started discussions with other foreign ministers. While many of them supported treaty changes, unanimity of all 27 EU countries would be required, he said, possibly aware of his illusions.

He immediately caught heat from stalwarts in the coalition government. Some called it “populist”—as opposed to elitist, perhaps. Chancellor Werner Faymann was worried about “the negative consequences of a breakup of the Eurozone”—even he used breakup of the Eurozone, a concept now as common as the currency itself, though for top politicians, it had been an unmentionable not long ago. And in Germany, the discussion had already come to a boil [read... German Bailout Rebellion: “We Have Euro-Anarchy”].

In Finland, Foreign Minister Erkki Tuomioja poured gasoline on the fire: “We have to face openly the possibility of a euro-break up,” he said. “Our officials, like everybody else, and like every general staff, have some sort of operational plan for any eventuality.” The only handicap? “A Eurozone break-up would cost more in the short-run or medium-run than managing the crisis.” So it was just a matter of when to recognize the costs incurred in prior years: publicizing them now or sweeping them under the rug via the bailout funds that Stronach had correctly called “insolvency procrastination.”

Like Stronach, Tuomioja wanted to preserve the EU, and dumping the euro would make it “function better,” he said. He confirmed the scenario that either the south or the north would escape “because this currency straitjacket is causing misery for millions and destroying Europe’s future.” It didn’t help that he called the euro “a total catastrophe.”

Not a day passes by when the concept of a Eurozone breakup doesn’t flare up in public. Each time, it saps confidence in the euro even more, though “confidence” is the only thing that separates that house of cards from collapse. The 21 EU summits to save the Eurozone, the waves of half-hearted dog-and-pony shows, and the alphabet soup of tangled-up and ineffectual bailout measures have all failed to stem the slide. There is nothing to indicate that a magic potion could eventually be found. And the fact that “breakup of the Eurozone” is such a common topic at the top of the political power structure has infused it with a life of its own.

“Default is not necessarily destructive,” said Panayiotis Lafazanis, a Greek politician, as the system in Greece is assuming aspects of financial rigor mortis. Read....  The Greek Bailout Sham Is Getting Gummed Up.

And here’s a veritable chorus of former (and current) central bankers lashing out against central-bank sins and shenanigans, by George Dorgan.

 


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Mon, 11/05/2012 - 00:41 | Link to Comment watch2x
watch2x's picture

The movie could not have come at a better duration. Family who grew up during the era of the colonnade are now starting to watch series families of their own, and are very likely to cachinnation along with the pl of child they bear to the theaters. This same video pastime procreation also witnessed the Disney Revival of letters and arts of the in season 90's: The Little Mermaid, Elegance and the Beast of the field, Aladdin, and the King of beasts Sovereign. With Perdition-It Ralph destined to be an importunate classic, following the result of the equally affecting Tangled, we are in for a new Disney Revival of letters and watch the dark knight rises online for a whole new procreation.

Sun, 11/04/2012 - 23:38 | Link to Comment watch2x
watch2x's picture

Disney has made some really useful jocund movies, but they had never done a lot of movies that are as beaming and primitive as Desolation-it Ralph, the new jocund thin skin or watch the dark knight rises online. The movie centers on Ralph (voiced by John C. Reilly), the rogue in the "Fix-it Felix" colonnade pastime, who decides to become a brave man.

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Mon, 08/20/2012 - 09:54 | Link to Comment Vegetius
Vegetius's picture

Hot time in Europe coming up, and the powers that be deserve everything they are going to get.

Ask an Ancient Greek-

hamartia — the tragic flaw in the system

hubris — the belief the good times would never end 

nemesis — disaster

anagnorisis — the moment of recognition

catharsis, the experience of purgation and relief

 

Mon, 08/20/2012 - 07:41 | Link to Comment dolly madison
dolly madison's picture

My comment isn't on topic.  It is just something I thought of.  It's about how the Rothschild's control all but 3 central banks in the world and about participatory democracy.  The thing is presidents and dictators around the world have unsuccessfully tried to keep the Rothschild central banks out of their countries to no avail.  I do not see how we can keep them out under any system with leaders.  The banksters surely use a carrot and stick to have gotten as far as they have, and leaders will always be able to eventually be controlled in this manner.  I don't see any other way to stop it without getting more power to the people. 

Mon, 08/20/2012 - 10:16 | Link to Comment NEOSERF
NEOSERF's picture

And it is slightly signficant no matter how insignificant the "investment" that Lord Rothschild is now betting against the Euro...truly he should be "in the know"

Mon, 08/20/2012 - 07:46 | Link to Comment falak pema
falak pema's picture

Dolly you have a pair and you have a brain and you have a heart. A banker has a pair, he has a brain but he has no heart. 

Leading with the heart is what the people do; and the bankers love to undo; often through war as last expedient. 

Mon, 08/20/2012 - 06:53 | Link to Comment negative rates
negative rates's picture

Seems the Euro is tangled up in blue.

Mon, 08/20/2012 - 07:55 | Link to Comment covert
Mon, 08/20/2012 - 06:28 | Link to Comment Nachdenken
Nachdenken's picture

Right, the con in confidence is out, the deck of cards will be reshuffled and a new house built.  Tis money that makes the world go round.

Mon, 08/20/2012 - 08:11 | Link to Comment falak pema
falak pema's picture

This is the cacaphonic stuttering coming out today from TPTB in Eurozone :

2719973

Ps : OT

A gourmet writer well known to media was invited to a Hi-society lady's party to taste the concoctions of her much touted new haute gastronomie cook. 

Here is what he wrote after that monumental meal :

"If the soup had been as warm as the wine, if the wine had been as aged as the fowl, if the fowl had been as fat and juicy as the lady hostess, the meal might have warranted a passing mention..."

Sounds like the sort of Epitaph that Wolf has in mind for the Euro banquet currently in progress! 

Mon, 08/20/2012 - 04:19 | Link to Comment ebworthen
ebworthen's picture

The Eurozone is dragging out the death of the Euro so everyone can move their chips to where they think they are safer.

The stalling isn't about preserving the Euro; it is about the have's having time to get their assets to safe havens.

Defaults, Deutschmarks, and Drachmas when the dominoes finally start to fall.

Mon, 08/20/2012 - 09:10 | Link to Comment shovelhead
shovelhead's picture

Will somebody please tell that pizza-on-a-stick vendor to move his money so we can get this over with?

 

Mon, 08/20/2012 - 04:10 | Link to Comment Coldfire
Coldfire's picture

Note to Euro:

Just. Die. Already.

Sincerely,

Coldfire

Mon, 08/20/2012 - 01:41 | Link to Comment chump666
chump666's picture

"A Cacophony Of Discord, Defaults, And Visions Of Impossibility"

Summed up: http://youtu.be/iu8O_pZVqXE

 

Mon, 08/20/2012 - 01:36 | Link to Comment sitenine
sitenine's picture

Good article.  It reminds us again that when debt becomes unsustainable, then default happens.  Arranging a treaty to ignore the remotest possibility of future default and provide no 'way out' was nothing short of hubris in the first place.  The Euro was born to die, and die quickly.

Mon, 08/20/2012 - 07:51 | Link to Comment falak pema
falak pema's picture

You sound like Zeus, high on Ouzo or is it nectar? 

Maybe I come to its burial if you tell me exactly when! 

Sun, 08/19/2012 - 23:46 | Link to Comment StychoKiller
StychoKiller's picture

Where's Prof. Severus Snape when ya need him?

Sun, 08/19/2012 - 23:36 | Link to Comment jimmyjames
jimmyjames's picture

“Default is not necessarily destructive,” said Panayiotis Lafazanis, a Greek politician, as the system in Greece is assuming aspects of financial rigor mortis.

*************

It seems to be working for Iceland so far-

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