Greece’s Great Depression: “Everyone is Going into a Black Hole”
RT interviews University of Athens economics professor Yanis Varoufakis on the latest round of Greek bailout negotiations.
Read more...Category Archives: Currencies
Draghi Does His Best
By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness
Two weeks ago I wrote a post about Mario Draghi and what appeared to be ECB’s step across the Rubicon into the arena of politics and fiscal policy in order to force Europe’s politicians to break the ‘chicken and egg’ stand-off that has plagued Europe for over a year. In that post I described his actions as a bluff called of both sides of the divide:
Read more...Yanis Varoufakis: How the ECB is Complicit in a Macro-Financial Debacle
Ponzi growth happens when unsustainable capital flows, wilfully predicated upon funding schemes that Reason knows to be fraudulent, give rise to large spurts of economic activity.
Ponzi austerity, in contrast, is what happens when unsustainable spending cuts, wilfully predicated upon funding schemes that Reason knows to be fraudulent, cause significant drops in economic activity.
It is an incontestable fact that Europe’s Periphery shifted from Ponzi growth to Ponzi austerity some time after the Crash of 2008.
Read more...Political Trouble Bubbles in Italy and Spain
By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness
As you may have noticed the news is a bit slow out of Europe recently. It is the holiday season in which the Euro-elite pack-up and head to the beaches for some R&R. Angela Merkel returned from her break yesterday so over the next week or so we should start to see some clarity around exactly what her government has to say about Mario Draghi’s master plan.
In the meantime the focus is back on Greece where the Troika has been visiting once again.
Read more...Is Draghi’s EuroRescue Plan Coming Unglued?
No sooner had some astute Euro commentators noted that Draghi might have found a path through the Euro mess to keep it patched up long enough for to impose austerity on the periphery and drive all of Europe into a lovely depression, various elements of his plan look as if they were coming unglued.
Read more...Will Draghi Outmaneuver the Bundesbank?
Ambrose Evans-Pritchard of the Telegraph, who correctly called that ECB would not take action last week, argues in his latest article that Mario Draghi and Italy’s Mario Monti have isolated the Bundesbank and are closing in on being able to buy bonds along side the Eurozone rescue facilities once the ESM presumably goes live (the assumption is that the German constitutional court will lift its injunction on September 11). Draghi hopes to keep Mr. Market at bay till then by a combination of happy talk and threats.
Read more...Yanis Varoufakis: Draghi Greatly Diminished the Office of the ECB, Sacrificed the Fiscal/Monetary Distinction, and Didn’t Do Much for the Euro While He Was At It
By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog
First came the impressive declarations: The ECB will do whatever is necessary to ensure that those who go short on the euro, who bet on its disintegration, will lose. “And, believe me”, he added “it will be enough”. He also, rather significantly, uttered the term ‘convertibility risk’ (code-words for the risk that funds kept in some part of the Eurozone will be forcefully converted to some new, devalued, currency) and pledged to eradicate it. No wonder, the markets responded with considerable enthusiasm.
Then came the moment to put up or forever lose his credibility. Alas, probably under incredible pressure from the Bundesbank, he opted for the latter.
Read more...Draghi Continues Handwaving as EuroCrisis Worsens
Despite the high expectations, nay, demands of the Bond Gods, ECB chief Mario Draghi, who had promised to part the seas and deliver investors to a promised land of Eurotranquility, which these days means at least a few weeks of relief, instead resorted to more brave-sounding talk. Today his message was he and his fellow Eurocrats were still working on a plan to do something really big, not to worry. Markets “recoiled,” in the words of the Financial Times.
Read more...More on Draghi’s “The ECB is All In” Bluff
The more news comes out, the more it looks like Mario Draghi’s pledge that the ECB would do all it would take to save the Euro was a bluff.
Read more...Germans Getting Even More Opposed to Being in the Eurozone
Over the weekend, the newspaper Bild released the results of a new poll on German sentiment on the Euro. It found that 51% thought Germany would do better by leaving the Eurozone with 29% saying Germany would fare worse. In addition, 71% of the respondents said Greece should be expelled from the Eurozone if it could not live up to its austerity commitments.
These results aren’t particularly novel; a large cohort of Germans have been vocally opposed to Eurorescues for some time. What is new about this poll is how low the percentage is that sees being in the Euro as good for Germany.
Read more...Scotland Debates Independence and Launching New Currency
Introduction by Philip Pilkington
The Real News Network has recently run an excellent piece on Scottish independence. As this clip shows, the Scottish National Party is a breath of fresh air given the destruction of the British Labour Party by arch-imperialist Tony Blair and his Thatcherite cronies during the 1990s. The SNP is not only offering Scots a break with a past that was, on occasion, less than edifying but they are also offering them a new form of politics — that is, a return to the sort of social democratic, forward-looking governance that Britain lost after New Labour solidified the victory of neoliberalism in the elections of 1997.
Read more...EuroCrisis Intensifies as Spain Spirals Downward, Greek Impasse Nigh
It is increasingly difficult to find metaphors adequate to describe the pathological dysfunction among European leaders as their rigidities and biases make a full blown crisis look inevitable.
Read more...Spain Slides
By Delusional Economics, a regular blogger at MacroBusiness and a consulting editor at the Macro Investor newsletter. He is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint
It was an all round horrible night for Spain, starting with a bond auction that went a little wrong:
Read more...Yanis Varoufakis: It is Now Official – The Eurozone’s Monetary Transmission System is Broken
By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog
Under normal conditions, the interest rates that you and I must pay on a home loan, a car loan, our credit card, a business loan are pegged onto two crucial rates. One is the rate that banks charge one another in order to borrow from each other. The other is the Central Bank’s overnight rate. Alas, neither of these interest rates matter during this Crisis. While such ‘official’ rates are tending to zero (as Central Banks try to squeeze the costs of borrowing to nothing), the interest rates people and firms pay are much, much higher and track indices of fear and subjective estimates of the Eurozone’s disintegration.
Read more...Marshall Auerback: The Pain in Spain
By Marshall Auerback, a hedge fund manager and portfolio strategist. Cross posted from New Economic Perspectives.
Just when you think that things can get no worse in Spain, they do. Take a look at this chart, courtesy of Credit Suisse via FT’s Alphaville
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