The Sarrazin factor

Tuesday, 22 May, 2012

To the horror of the German elites, the book that’s topping the Amazon (Germany) bestseller list is “Europa braucht den Euro nicht: Wie uns politisches Wunschdenken in die Krise geführt hat” (Europe does not need the euro: How political wishful thinking has led us into crisis) by the former Bundesbank board member Thilo Sarrazin. The […]

Continue Reading »

It will have to go, he said

Tuesday, 22 May, 2012

In the Financial Times today, columnist Gideon Rachman goes there. It is “Time for a eurozone divorce” he declares: “So — to answer the question that I dodged back in December — yes, I do think that it would ultimately be better if the eurozone broke up. This might not involve a complete reversion to […]

Continue Reading »

How those Yahoos! destroyed Flickr!

Wednesday, 16 May, 2012

In one of the best articles of its kind for many a long day, Mat Honan of Gizmodo exposes corporate stupidity on a staggering scale in a piece titled “How Yahoo Killed Flickr and Lost the Internet“. Money quote: “There’s a difference between a missed opportunity and a complete fuck-up. When Yahoo failed to capitalize […]

Continue Reading »

Heading for the border, running for the bank exits

Wednesday, 16 May, 2012

“Greek depositors withdrew €700 million ($898 million) from local banks Monday, the country’s president said, as he warned that the situation facing Greece’s lenders was very difficult.” The Wall Street Journal This is a classic Catch-22 situation as Greek depositors will increasingly want to avoid their valuable euros being turned into worthless drachmas, but a […]

Continue Reading »

Surreal Europe: bottoms-up from the tops-down

Tuesday, 15 May, 2012

There are times, and these are indeed such times, when Europe appears to be the set of a surreal soap opera directed by the ghost of Luis Buñuel. In the latest episode, some of the original supporters of the utterly reckless common currency experiment are now proposing a rescue plan. Topping the bill among the […]

Continue Reading »

The euro: More than a disaster

Thursday, 12 April, 2012

El Confidencial is a centre-right Spanish digital publication so, given the ideology of the current leadership in Madrid, it’s worth keeping an eye on to see how the wind is blowing. “La única alternativa de Rajoy: sacar a España del euro” is the title on the latest column by Federico Quevedo and the message is […]

Continue Reading »

Kejserens nye Klæder as seen by Jurre Hermans

Wednesday, 4 April, 2012

When the somewhat nerdy-looking Baron Wolfson of Aspley Guise decided to award a prize worth £250,000 (€300,500) to the person “who is able to articulate how best to manage the orderly exit of one of more member states from the European Monetary Union”, the usual tut-tutting about “English euroscepticism” and “titled Tories” did the rounds. […]

Continue Reading »

The real Gisele Bündchen is so fickle

Monday, 26 March, 2012

Back in 2007, the world’s top-earning model, Gisele Bündchen, reportedly responded to the falling value of the US dollar by refusing to be paid in the currency of Uncle Sam. Her sister and manager told the Bloomberg news agency that Gisele preferred to be paid in euros. Five years ago, the euro was seen as […]

Continue Reading »

The austerity referendum

Wednesday, 29 February, 2012

Ireland’s domestic economy is in a truly dreadful state. The IMF forecasts growth of 0.5 per cent, while Citigroup predicts shrinkage of one per cent. Home prices continue to slump, the unemployment rate has climbed to 14.5 percent and emigration has returned to 1980s levels. Meanwhile, the government is pushing through huge cuts in public […]

Continue Reading »

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.

Punk Economics

Tuesday, 31 January, 2012

Irish economist, David McWilliams, explains the euro crisis using “punk economics“, which he describes as “a new way looking at the economy based on the central idea that what is important is not complicated and what is complicated is never important.”

Snippet: “The German solution will only cause a recession, or more recessions, in the periphery. This will cause money to flow into Germany, not out of Germany, because the risk of default in the periphery increases and in time much of Europe will begin to look like Greece, teetering on the edge. As money flows into Germany, German bond yields fall, Greece will default, and this will give the others permission to do likewise because a default in Greece sets off a domino effect all over Europe because Europeans will say, ‘Well, if the Greeks can do it, why can’t we?’ Is it any wonder right now that the price of gold is firm, that the yield on German bonds is falling and that the euro is weakening against the dollar?” He’s onto something.