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Who Said It? "Without Debt Restructuring... EU Policies Are A Sure Path To Economic & Social Failure"
Amid all the bluster, propaganda, and pressure from 'Europe-ex-Greece' towards Greece, we thought the words of Luis de Guindos (of course before he became the status-quo-fulfilling Finance Minister of Spain) were particularly enlightening given Greece's 'demands' and Europe's rebuttal...
"To insist on the viability of a strategy without debt restructuriung may lead to exhaustion of governments in peripheral countries, which due to their weakness, at some point may even question the future of the single currency."
- April 3rd, 2011
"It is increasingly evident that there is something wrong with the way we designed the rescue mechanisms for peripheral countries. Unlike what happens with IMF programs, since the euro zone [countries] cannot devalue, restructuring is avoided at all costs. To focus emphasis on fiscal adjustments only gives place to unbalanced programs, which is a sure path to economic and social failure. This only prevents countries from failing to to pay their obligations in the short term, but does nothing to promote growth. The impression is that the sole purpose is to buy time."
-April 17th, 2011
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But, of course, when have previous statements in direct opposition to current policy confidence ever shattered investor faith in policymakers' penchant for Einsteinian insanity.
h/t @TrumanFactor
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white power
joint and several, joint and several, joint and several, joint and several
Let's see, debt and compound interest grows on an exponential function, but economies grow -- when they grow at all -- under an arithmatic function. Anyone see a problem here?
The "crisis" is built in.
Economies tends follow the S curve as natural systems do. Of course economies ar not natural systems, but they follow similar algorithms (there are producers, consumers, inputs, outputs, PARASITES etc).
EDIT: And yes, or financial system is a giant Ponzi scheme (these really requires exponential growth).
"Without addressing and rooting out corruption and psychopathic lawlessness at the highest levels, ALL policies are a sure route to economic and social failure."
--Me, and everyone who understands what Zero Hedge is really about
Someone here wrote recently, that ZH is all about BTFD ;)
Thanks for cutting through all the bullshit. Excessive debt is just the manifestation/symptom of looting/lawlessness. Of course there are second-order effects, but the main issue is the corruption.
"main issue is the corruption"
indeed it is.
Adam Curtis spells this out quite clearly in reference to Afghanistan in his new film:
http://thoughtmaybe.com/bitter-lake/
questions are:
(1) how to root it out without risking a full-scale destruction of civilization as we know it?
(2) how to design a system(s) that acknowledge this aspect in human nature and insulates itself from the negative effects of it as best as possible?
True....
However, philosopher kings have never been realized & thus, we have what we have always had; wolves & sheep...
The sheep have little, if any, ability & even less desire to change the equation...
Perhaps, it is just who we are as humans?..
perhaps...or perhaps this is the animal that we have been conditioned to feed...and thus become.
choices...it's all about choices, yes?
There is no doubt that sheep have been conditioned & breed to be better sheep, over the past 6 thousand years, or so..
To be sure, there are some 'mutants' amgong us, who wish to rebel, but the great masses are quite content, imo... At least, enough so that they aren't willing to risk a rebellion..
just throwin something out for the sake of discussion, perhaps this wish to rebel in the 'mutants' is also part of the conditioning?
"rebel...Against what?" - bob marley
rebellion implies that there is a master/slave, superior/inferior relationship, instead of a conflict (arising from a difference of opinion) amongst equals.
Was the development of a household-based middle class with some measure of power just an aberration? Maybe. Somewhere in the seizure of coffee from the 'Moors' (around the Siege of Vienna or a bit before), and the developments in Protestantism (notably the execution of the King of England by Cromwell's forces), Europe in the 1600s got some crazy ideas and economic/technological/military stuff moving. By the time of 'that damned Presbyterian revolution' as later King George III said of the Continental Congress, and the wildfire that swept France and the territories of New Spain shortly after, something was indeed afoot.
But, was it all a dream? Was the peak of the U.S. post WWII middle class, ironically of course right when everyone was bitching about it the most, i.e. about 1970-74, the absolute peak? Are we kidding ourselves, our kids, that what we've been raised to think of as right and proper can possibly persist?
Beats me. But it might be worth fighting for for another couple of generations.
"...the sole purpose is to buy time."
Cause and Effect
"If we do not ever take time, how can we ever have time ?"
Merovingian, Matrix
https://www.youtube.com/watch?v=3td5UpAXeJ4
The Carolinians would just reset their sundials and astrolabes and voila!-- there is the time you want.
This is rich stuff, coming as it does from a Spaniard after the massive looting conducted by the Spanish elite during the "Burbuja" years. The only difference between Greece and Spain is that Spain is considered TBTF by the Troika.
Why dont we all just cut the crap?
The next article about the Greek crisis should be a mature, patient, thoughtful analysis of the costs and benefits of ending the Euro right now. We can go country by country, starting with Greece and ending in France.
Greece is considered too big to fail as well.
European banks have never been recapitalized so they are hanging by a razors edge to solvency. any hiccup in the assets on balance sheets sends the whole fucking place into convulsions.
Greece cannot leave without causing the European financial system to suffer a black swan event like Lehman. Everyone and every thing will become suspect.
The only real solution, and I've been saying it for 6-7 years if for europe to Federalize, but that was the whole idea behind the Euro anyways. It was designed to fail and cause so much stife that the only solution was to force the countries to give up soveeignty to a new centralized government.
Just watch.
jim in mn. how do you propose to change that? you post wise posts. i am going to guess that here is no solution, just the pendalum swinging back and forth til mankind eliminates its' existence by the laws of natural proccess...
also from Mn and we deal with cold facts quite well, ha...
Isn't debt restructuring "buying time" as well?
Yes! But not what you think.
It provides time for the robbers to leave the scene of the crime, amidst the social and economic wreckage.
since the euro zone [countries] cannot devalue, restructuring is avoided at all costs.
Thats what EU membership brings you!
don't conflate the EU and the Eurozone. You can have your own currency, devalue it and hope for the terms of trade and external adjustments to bail you out. Or you can attempt an Irish-style "internal devaluation", keep the Euro, say 10 Hail Marys and hope for the best.
There is pain either way and no point posing false dichotomies like this Spaniard.
Jim in MN above makes the correct point: these countries are in the shit because they were looted by corrupt Elites. Looted in Drachmas or Euros makes no difference.
Again...nust pure speculation on my part...but Greece looks like a "bad bank" to me...with all the euro "poopie paper" being shoved into it so that when the inevitable occurs (EZ break up) Greece gets hit the worst.
So far they still look like they're playing the sucker role still.
Just my two cents.
The inability to restructure makes the euro currency a parallel "gold standard" which is why the broke countries are going under. The USA was going under in the 1930s with the gold standard ruling the dollar, that's why FDR nationalized gold and devalued the dollar taking the price of gold up to $35 per ounce from $20.75.
QE is an attempt to mimic the easing that took place under the repricing of gold while claiming to be still on the gold standard. Greece and the other BK'd nations need to get off the euro standard if they are to ever going to recover their economic vitality. The USA has avoided such unpleasantness because we just keep diluting our currency which has reserve status, an ersatz gold standard trumpeting its "full faith and credit" worthiness.
The adjustment will be earth-shattering when it is forced on the global scene.
The sole purpose is to buy time, bitchez.
those shylocks have no intention of making anything easy on anyone but themselves
"EU Policies Are A Sure Path To Economic & Social Failure"
ZWO mission accomplished
The answer is, of course, not devaluation, or monetary policy, but to "cut your cloth" to fit your circumstances and stop pretending you are something you are not, in the case of the Bay of PIIGS, stop pretending you are solvent and that your government is a success in setting welfare, trade, education and health policies.
Just because a politican can shout very loud, sound very plausible or can take backhanders for those who want that poltician in power, does not make that politcian capable of administering anything beyond supervising sailors on shore leave.
The same principle applies to most countries and their 100% pwned central banks. It has been proven tiem and again that central banks that engage in adjustments of monetary polciy settings beyond ensuring that sufficient notes and coins are in circulation (or perhaps M0) have no positive impact on living standards, economic policy or faciltitating a positive "economic" environment AND that one countries central bank intervention inevitably must be sterilized by another countries central bank.
Countries in the Bay of PIIGS need to hit the reset button and cancel any and every debt that cannot be paid back AND every social spending programme and promise that cannot be afforded. These countries desparately need to get out of involvement in anything to do with spending money.
The same applies to the countries bordering the Pacific Ocean and the North Sea. Ok, any country that has a central bank that thinks it can print a profit for itself or its banking sector. The logic of central bansk providing a bridging loan to their captive governments so that these governments can address debt and deficits has passed. It's been 50 years now.
Debt grows exponentially, populations and GDP simpy don't. Stop behaving as if only upside in prices is permitted and let technology progress, over the next few hundred years, to reduce the need to work to zero.
Q: And which politician ever born would willingly choose to end the social programs and promises?
A: the one who will lose the next election.
Politics and reality don't necessarily make good bedfellows.
quite right...genghis khan, bonaparte, ceasar, stalin, xerxes, charlemagne, mao, attila, hitler were not politicians.. just leaders who used gratuitous and terrible violence to fill a gap left by failing societies in the era in which they lived.
the thing they have in common is that they were leaders that bound people to a different path. a violent one. we have more brains, more facilities and more opportunities to create a better path, without violence, but the events of ukraine, syria, venuzuela, brazil et al prove that the political system needs to evolve.
i say, decision making representation according to choice of charitable donations made, by the contributors of the donations, with no central banks. national/international infrastructure and security; im still thinking about, you can't build autobahns without using them for tanks, so...anyway..just saying.
Debt Jubillees have happened throughout history-in the 30's , during the depression, all European allies in the First World War of the US, excluding Great Britain (though they should have) reneged on thire war debt to the US who wisely kept out of the fray till 1917.
The Roman republic had a couple of Jubilees, we are in the early days of our inevitable world wide debt Jubilee
Greece may start this trend, maybe not but in the very near future a Soverreign or a large mullti (like the huge indebted 155billion Brazilian energy company-Petrbas?) will go tits and debt forgiveness will eventually occur: one hopes without too much blood letting....
It seems the looting was done in the country under discussion. The ECB 'only' provided the money'.
Ask this: if all of the money had been distributed to the people and they spent it, would the situation be any different? It would not be. Borrowing more than you can repay did not start with the EU.
When the medium of exchange is the same thing as the store of value the expansion of the medium of exchange immediately destroys the store of value.
The ECB uses gold as it's store of value (along with some US Treasuries). For now it hesitates to ruin the medium of exchange by printing to ease the misery. If the crisis becomes existential the ECB could ruin the entire monetary system of the world by buying enormous amounts of physical gold. This would kill the dollar and yet the rise in price that would happen to gold would hardly affect the Euro as the ECB would have the gold on it's balance sheet.
The game is to outlast the $IMF system. If it must I suspect the ECB will bend but not enough to do serious harm to the Euro.
"The game is to outlast the $IMF system."
Spot on!
+1000
"Who Said It? "Without Debt Restructuring... EU Policies Are A Sure Path To Economic & Social Failure"
Who said it? "There is nothing new under the sun".
Economic and social failure had already occurred, which is why debt needed restructuring. The 1990's boom was the path to the current bust.
the official EU policy is to cut debtor flesh
Sovereign debt free money will cycle into a debt instrument and then decrement the numbers. Eventually the numbers will go to zero, and debt instrument will be ripped up. The floating money will cycle out of debt instrument and be injected back into the supply due to law. This type of money has a mirror that is flux energy and capacity of a population to labor and produce.
Sovereign debt free money can be spent into channels of production, so labor is employed and builds out infrastruture. This infrastructure can be long lasting and a benefit to posterity.
Debt as private credit bank money is a fairly new phenemonena on world scene. Debt Free floating money pays "credit" (debt as money) but not vice versa. In other words, a large component of the money supply needs to be debt free.
For sure, some body will figure out how to trap this money and take rents, perhaps by monopolizing some sort of natural resource. The Monetary Authority should be empowered to tax rents, especially in a debt free money system.
Fiscal Policy and Monetary Policy need to mature, and we need to get off of the private banker debt system now harvesting humanity. Humans need political representation, and that is impossible with private bank money.
Huber has alread worked out how double entry mechanics will work with debt free sovereign money. The rules are simple, monetary authority employees are held to account by the law, otherwise they go to jail. Audits and open books insure compliance and low fraud.
So, a debt jubilee is probably required to get rid of onerous debts, where those debts are denominated in bank credit (private bank notes like Federal Reserve). Another way is to just pay them down over time with debt free. However, paying down over time will also reward current debt holders somewhat, as they used fraud to hypothecate us and set the debt hook.
Any discussion of a Jubilee should also discuss sovereign money. They are closely related.
www.sovereignmoney.eu