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The two real options for a resolution of the eurozone crisis came into full conflict last week. The first is a common eurozone bond. The second is a monetisation of national debt through the European Central Bank. Angela Merkel rejects the former. Europe’s central bankers reject the latter. Jürgen Stark, a member of the European Central Bank’s executive board, rejects both, and last week resigned in protest. Along with other conservative economists, he is advocating a third way, adjustment through depression – the simultaneous deleveraging of the private and public sector debt.
As an advocate of eurozone bonds, I have to admit their prospect looks grim after last week’s ruling of the German constitutional court. The court upheld the European financial adjustment facility, the crisis mechanism. This was, undoubtedly, good news. But after I read the whole ruling, which ran to 29 tightly written pages, I realised that this judgement was not a victory for the eurozone at all. On the contrary, it categorically rules out any policy option beyond what has been agreed so far. I cannot see how it can be consistent with the survival of the eurozone, given the policies of member states and the ECB.
Bismarck famously pronounced that "God has a special providence for drunks, idiots, children and the United States of America." Once again, no matter how badly things go in our own land of the free, the land Euroweenies despise and Muslims in Grovesnor Square hate BECAUSE of our democratic freedoms, we are lucking out, even if it is through Bernanke's sneaky "quantitative easing."
The FT is a beast on copyright infringement, so read the rest of the article and find out why Europe has EVEN harder times ahead than the USA. The good news, the USA might be able to slough off the -power-drunk idiot man-child now living in the White House. Ain't it great that God's "SPECIAL PROVIDENCE" Bismarck spoke of prioritizes the USA before drunks, idiots and children?
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