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European Central Bank: Let Them Go Bankrupt!
Everyone has heard of Marie-Antoinette screaming from her balcony at the Palace of Versailles in the early hours of the French Revolution: “if there’s no bread, then let them eat cake!”. Right! Poverty-stricken Frenchmen had access to cake, of course, didn’t they! Well, anyone would think that today’s announcement by the European Central Bank board member, Jens Weidmann in a speech in Paris that EU states must be “allowed to go bankrupt” stands somewhere along the same line as the beheaded Queen’s fateful speech. Is he for real?
Weidmann stated that budget consolidation via spending cuts will allow for greater growth in the economy. It will also build on consumer confidence, which incidentally seems to be decidedly lacking in some EU states. Just as one telling example, the figures for Italian consumer confidence dropped from 86.3 in April to 85.9 in May. Admittedly, Italian consumers have been dragging their heels in the Eurozone and have been far from confident for a while now. But, is it any wonder that they having got the bunting out to celebrate a so-called imaginary confidence trick that they are still looking for? The number of Italians that have now officially entered deprivation has doubled in the last two years. That means that today the number of deprived people stands at 14% (or 8.6 million people). That’s hardly a cause for celebration. It’s hardly a reason to imagine that these countries can be allowed to fail.
Failure would mean that the whole EU image would be dragged down. The rest of the world would look on calmly as the EU project imploded and people were left destitute. Aren’t we too far into this now, that getting out of it would be too hard? Hasn’t the Marie-Antoinette attitude of ‘let them eat cake’ got to stop? Yes, Weidmann is right, there have to be cuts, we can’t maintain public debt at present levels. High levels of debt will stop central banks from maintaining some sort of price stability. But, Weidmann went on to add that inflation expectations, even if they were anchored, would not guarantee any future stability. He sees no conflict between budgetary consolidation and growth and any holding back on that consolidation would lead to uncertainty on the markets being intensified. All future stability will depend upon this in his opinion. Without consolidation, future financial solidity of countries will be a thing of the past. The dithering on the budgetary restraints and the uncertainty on the markets will also limit sovereign bonds.
The economic situation is challenging. But, letting countries fail would be the wrong choice. Weidmann told the French yesterday that they should catch up with Germany and that he welcomed them to do so. Follow me? I’ll open the way? Certainly, letting EU countries in financial crisis fail would provide great buoyancy to the markets and make them feel a whole lot happier. But, wouldn’t it be the trumpet call for the start of the end? If we allow those in real trouble to fail, then the knock-on effect will be enormous. Not just in Europe either. Ripping of the band aid now, means we are opening the wound to infection. Surely, that’s not the answer is it Weidmann?
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Pivotfarm you better go read up on iceland!
Granted, I am not the smartest crow in this corn field, but it sure sounds like this post is calling for moar central planning.
"The guy is a perfect example of what's wrong with the contemporary economic thinking.
Let it burn to the ground, we have to rebuild it anyway..."
It's burning to the ground anyway.
Sovereign governments go bankrupt all the time, through hyperinflation. They print money that has no value, and several European nations have taken this path in the last hundred years.
The EU would be smart to allow for countries such as Spain and Greece to walk away from their debt and get a fresh start. The euro would still be in place as a common currency, but countries would be responsible for their own debt, just as Texas does not have to bail out North Dakota, yet both use the dollar, the UCC, and both agree to sell gasoline by the gallon.
The EU should begin by breaking up all their banks so they are small enough for some good remnants, after most of them go under. And make no mistake, their will be a lot of pain, but it is going to happen anyway.
BTW
The olive oil regulation isn't such a bad idea. Leaving a small bowl of olive oil out to grow salmonella is stupid. Better to have some level of sanitation at the table...
The olive oil regulation isn't such a bad idea. Leaving a small bowl of olive oil out to grow salmonella is stupid. Better to have some level of sanitation at the table...
If you treat adults as children you get child adults who have NO responsibility. If you are worried about salmonella, go to another restaraunt, ask for new bowl or...... People fail to appreciate Patrick Henry: "Give me LIBERTY or Give me death." Fear of Salmonella, Fear of terrorist,...the state uses fear of death to take your liberty. Soilders die at a young age for YOUR LIBERTY; not for STATE POWER. On this Memorial Day, respect soilders sacrifice by living and helping your fellow men. Teach them to fish; do not give them fish, so they can have the confidence to be FREE.
The guy is a perfect example of what's wrong with the contemporary economic thinking.
Let it burn to the ground, we have to rebuild it anyway...
I haven't actually heard of Marie-Antoinette in a long while, but it's more than known that attribution is not only undue (that credit apparently belongs to Louis XIV's wife Marie-Thérèse, not Louis XVI's wife Marie-Antoinette), but apparently even unfair:
http://garethrussellpopular.blogspot.pt/2012/02/did-marie-antoinette-rea...
http://en.wikipedia.org/wiki/Let_them_eat_cake
TBTF ? WTF, is this article really suggesting that extend and pretend is the only way to fly? Pivotfarm, Get the fuck off of my planet! Oh I almost forgot; JUMP, FUCKER, JUMP!!!
Pivotfarm are you taking the Piss? Hang them fucking bankers HIGH NOW then Drawn and Quartered.
Maria A " let them ate Mcat "
Bankers are like women, one day promising tittilating tidbits and the next day the Scum Cops are turning up at your place of work.
"Let them eat iPads", The Bernank
From About.com:
SAY WHAT you will about her, Marie Antoinette never actually uttered the words "Let them eat cake." We have it on the authority of biographer Lady Antonia Fraser, who spoke on the subject at the 2002 Edinburgh Book Fair.
Though historians have known better all along, it is still popularly believed that Marie Antoinette, wife of Louis XVI and queen of France on the eve of the French Revolution, uttered the insensitive remark upon hearing peasants' complaints that there wasn't enough bread to go around: "Let them eat cake," she supposedly said. It's simply not true.
"It was said 100 years before her by Marie-Therese, the wife of Louis XIV," Fraser explains. "It was a callous and ignorant statement and she [Marie Antoinette] was neither."
Truth be known, the attribution is doubly erroneous in English, because the word "cake" is a mistranslation. In the original French the alleged quote reads, "Qu'ils mangent de la brioche," which means, literally, "Let them eat rich, expensive, funny-shaped, yellow, eggy buns."
What a poor article... Failure is needed to 1) stop the malinvest of throwing good money after bad that is hurting longer term growth 2) get reluctant politicians moving... Italy did NOTHING after Monti left in December (and is discussing to reverse some of the measures he took). Spain mostly raised taxes instead of spending less. France ... whatever... etc. etc. etc.
Failure is not the start of the end, it is the end of the biggest credit bubble ever blown up... It NEEDS to happen
For all you students of the French Revolution: The cake in the phrase "let them eat cake" refers to the crumbs left from the baking pans after baking bread, not real cake with icing!
oy..who is right?
from Cecil
At the time that whoever-she-was uttered the infamous quotation "let them eat cake," the word "cake" did not refer to the familiar dessert item that the modern-day French call le gateau. The operative term was brioche, a flour-and-water paste that was "caked" onto the interiors of the ovens and baking pans of the professional boulangers of the era. (The modern equivalent is the oil-and-flour mixture applied to non-Teflon cake pans.) At the end of the day, the baker would scrape the leavings from his pans and ovens and set them outside the door for the benefit of beggars and scavengers. Thus, the lady in question was simply giving practical, if somewhat flippant, advice to her poor subjects: If one cannot afford the bourgeois bread, he can avail himself of the poor man's "cake."
However, by the time Marie Antoinette ascended the throne, brioche had acquired its current meaning — a fancy pastry item which, like le gateau, was priced far beyond the means of any but the wealthiest classes. The anti-Marie propagandists were well aware that their compatriots, most of whom were uneducated in either history or semantics, would swallow the story whole, so to speak, and not get the joke. Bon appetit!
— N.D.G., Chicago
Cecil replies:
That's very interesting, N., but wrong. Brioche is a sort of crusty bun, typically containing milk, flour, eggs, sugar, butter, and whatnot. It's considered a delicacy, and as far as I can determine (which is pretty far) has been since the Middle Ages. According to one cooking historian, brioche originally contained brie cheese, whence the name. Nicolas Bonnefons, writing in Delices de la campagne in 1679, gives a recipe for brioche that calls for butter and soft cheese, plus a glaze containing beaten eggs and (if desired) honey. Sounds pretty tasty, and in any case certainly not something bakers would line pots with.
— Cecil Adams
"No problem can be solved from the same level of consciousness that created it." ~ Albert Einstein
So this leaves us with? No end in sight.
Or at least "Pure Evil's" henchmen. he may b smart enough to stay in the shadows.
Marie-Antoinette was actually sticking it to small business owners by reminding them (the bakers) that under the state price control system in place at the time they were obligated to sell "cake" at the price of bread if/when they ran out of bread.
And yes, states should be “allowed” to go bankrupt and so should banks, businesses and people. You’re basically advocating Too Big/Important Too Fail here which is exactly why this global, financial, zombie clusterfuck still infects the planet.
If nothing is ever allowed to fail, the price mechanism breaks down, markets don't clear, more dry timber builds up in the forest, governments build (bigger) moats around themselves, your wealth has a big fat bullseye on it and equilibrium is never restored. But equilibrium must and will be restored, it’s inevitable and delaying it just means the day of reckoning will be that much worse.
I assume what is meant by “budgetary consolidation” here is a forced marriage of EU member nations - with no popular consent of course I’m sure. In other words: Germans and Greeks don’t see eye-to-eye on the whole industriousness/work ethic/leisure/common culture thing but if we FORCE them under the same roof it will magically all work out. Right.
Nah a true sov government does not go bankrupt.
It would take away the banking licences while not disrupting the national money supply.
(turning those deposits into national equity)
I guess millions will die in Europe and around the world before this happens as Europe is clearly the plantation owners house.
Weidmann is a creature of usury like all the rest using false conflicts to stirr the pot of profits.
We are dealing with pure evil............there is no mistake about it now.
All the evidence is in.
Quit monpolizing the top line and bugger off.
Is this a reply to a deleted comment? I suggest that if ZH is deleting comments, at least leave a trace so that everyone else has a clue whats going on.
In case it was unclear, the comment was addressed to "pivot farm" who persists in posting poor-quality articles two at a time in the top section of ZH immediately below the advertising leaderboard, thus devaluing the top section article list for better posters.
Ok, thanks - it's just that I seem to have come across some deleted posts before, so I just thought it might've been the case here.