Tag: ECB

Strong tobacco from Stark

Thursday, 12 February, 2015 0 Comments

“The truth is that, in contrast to many eurozone countries, Germany has reliably pursued a prudent economic policy. While others were living beyond their means, Germany avoided excess. These are deep cultural differences and the currency union brings them to light once again.” So writes Jürgen Stark, a former board member of the European Central Bank, in today’s Financial Times. “The historical and cultural differences that divide Europe’s union” is the title of the piece and it reveals all one needs to know about the division and disunion at the heart of the euro experiment.

In some ways, the comments are more revealing than the article.

This man needs to read Michael Pettis.The self satisfaction is nauseating.While the “bailout” of the German banks was going on, Siemens was flogging submarines and other much needed rubbish through a vast system of bribery and corruption. senior muppet

For the Greeks it was wonderful for many years to be able to run a political system of patrimonial privilege funded by transfers from outside the country, but that is a self-exciting system in need of a negative feedback loop – which it finally got. The upshot is that now the Greeks are being compelled to consider a choice between maintaining their old social contract or continuing to receive transfers from outside, but not both. In such cases one would normally expect a society to make the most strenuous efforts to avoid the choice. But in their anger at the unfairness of it all, the Greeks now look capable of actually, voluntarily making that choice. Amazing! This moment will not last, but in this moment all kinds of potential surprises now lurk. Whatever

Nice piece of Teutonic my-opism. German non-keynesian economics work as long as there are other countries willing to generate excess demand through borrowing and you can export to (US, China, Souther Europe). It is recipe for disaster for continental size economies. This is not a theoretical debate, the results are painfully obvious. True Finance

Sorry the disasters of the early twentieth century were German disasters. No other country was so bad. You simply cannot read across from a completely awful Germany to anywhere else. Nicki

If Mr Stark is right about the “deep cultural differences” between Eurozone countries, then why on earth did they create a common currency in the first place? This article is basically a list of all the reasons that the Euro should never have come into existence. If the Euro is to succeed, Eurozone countries must work more closely to coordinate their economic policies. It is obvious now that they cannot do so. I have always hoped that the UK would eventually join the Eurozone, but Mr Stark has finally removed the scales from my eyes. Gordon Brown was right after all. Little Briton

Meanwhile, in Spain, six years into its depression, 5.46 million people don’t have jobs, two million households have no earned income, youth unemployment is at 51.4 percent and home prices are down 42 percent. No surprise, then, that the neo-Bolivarian Podemos party is pulling ahead in the polls. The latest Metroscopia survey gave it 28 percent. The ruling conservatives have dropped to 21 percent and the once-mighty PSOE, the Spanish Workers Socialist Party, has fallen to 18 percent. The message to Jürgen Stark is clear: The elites can defend the euro, but they will lose their political base.


Selfish

Thursday, 22 January, 2015 0 Comments

Yes, the European Central Bank’s belated embrace of quantitative easing will dominate today’s headlines, but given the widespread disaffection with the continent’s out-of-touch leadership and the gnawing sense of being left behind in an increasingly globalized world, Europeans are switching off. Instead of the dismal Mario Draghi, people want the fascinating Kim Kardashian. And she’s everywhere today.

First: Mrs Kanye West took to Instagram on Tuesday to share some snow shots while wearing a “Furkini” that shows off her big booty, flat tummy and signature boobs. She captioned the pic: “Boots with the fur…

Second: Medium has a marvellously nerdy piece titled “How PAPER Magazine’s web engineers scaled their back-end for Kim Kardashian (SFW)“. Snippet: “The first thing Knauss did was get a big honking server to run on the Amazon cloud, with a large hard drive. He copied all the images and files from the smaller original web server to the new, big server. Then he installed a piece of software called Gluster, which allows many computers to share files with each other—it’s sort of like a version of Dropbox that you can completely control.”

Third: On 28 April, Selfish, by Kim Kardashian, will be published. Blurb: “Kim has mastered the art of taking flattering and highly personal photos of oneself. For the first time in print, this book presents some of Kim’s favorite selfies in one volume.”

Over to you, Mario.

Selfie


Patacombos for the PIIGS!

Thursday, 16 February, 2012

Because the PIIGS are prevented from getting their grubby trotters on the printing presses by the European Central Bank, all they can do is stand idly, impotently by as money flows out of their economies and into more stable havens. This is exactly how it was in Argentina a decade ago except that Buenos Aires proved more imaginative when faced with this dilemma. The Argentine treasury began issuing a raft of IOUs with exotic names: lecops, porteños, quebrachos and patacones, for example. These were greeted with disdain by the global money markets, but McDonald’s, that beacon of capitalism and proletarian cuisine, was more humane:

“The Buenos Aires outlet of burger behemoth McDonald’s is preparing to accept one-year bonds in payment for food, as a cash crisis grips the Argentine economy tighter with the continued lack of conclusion to talks between the country and the International Monetary Fund (IMF). The bonds, nicknamed patacones after a currency that became defunct 120 years ago, will be issued as part-payment of wages for the 150,000 state workers in Buenos Aires who earn more than US$740 a month… McDonald’s has launched a special new meal deal called the ‘Patacombo’, consisting of two cheeseburgers, French fries and a drink.”

In the end, the patacones didn’t do the business and at the beginning of 2002 Argentina defaulted on its international debt. The peso’s 11 year-old tie to the US dollar was rescinded and the country was plunged into an enormous financial and socio-economic crisis. Unemployment rose to 25 per cent and wages dropped to their lowest level in 60 years. Moral of story: PIIGS should think carefully about how they intend to pay for their Patacombos, or else change their diet.


Northern and southern Europe are different places

Thursday, 29 December, 2011

Some of the best commentary on Europe and the euro this year has come from the keyboard of Walter Russell Mead. This week’s column is titled Europe Is Still Hip Deep In The Bad Stuff and here’s the money quote: “But if Europe dodged the charge of an angry bear last month, it is still […]

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