“Its a slow motion train wreck”
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Joined Nov 11, 2007
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look, folks, the situation in Europe isn’t about “right” or “wrong”, about “noble germans” and “reckless lazy PIIGS”.
Its all about THE most flawed currency system of all time. Germany will eventually have spiking bond yields and even Germany will eventually go down too. France has no chance under the current system. The Austerity they are imposing on trade deficit nations will force those nations into recession, and probably severe.
I’ve gone over this several times, usually to insults of my intelligence or even nobility. But the Eurozone cannot exist without some means to create currency. No currency system can hope to grow year after year without some means to create currency.
Lest ye all forget, the gold standard created currency constantly. Sporadically and unevenly, but constantly. (from gold mining, etc.).
The contagion in Europe will lead to absolute economic catastrophe in Europe, and can be stopped by only one thing: creating currency. Which means some centralized entity capable of distributing Euros around the EZ, or splitting into seperate currencies.
They could stabilize the situation for the time being by having the ECB simply lend to all countries in the Eurozone at, say, 2% or 3% or whatever.
Thats how they can buy time, ONLY by creating a capacity to create currency (either by going back to sovereign currencies or creating some central entity) does the Eurozone have any chance to survive, and left as is, Germany goes down eventually.
You read it here, in the comments section of IBC news first, a month ago or more, from your friendly neighborhood Checklist. It takes Germany, too.
And the bailouts, btw, are largely FOR Germany, who do you think lent the PIIGS all that money?
Roubini’s career is a slow motion train wreck.