Move over Maggie! Europe has a New Iron Chancellor. Merkel may look like a frumpy dumpling, but she's tuffer than walnuts. The broken teeth of the G(7) are proof of that.
Whistling through the gaps, the G8 communique informed the rest of us that its member states (firmly) committed themselves "to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us."
Barely a tissue to cover the shabby.
The issue is simple. Germany (or more precisely, German banks and "private investors") are insisting on their pounds of flesh, which means that Greeks must commit themselves to eating beans for the next half century or so. It was this kind of "commitment" (aka the Dawes Plan) that once brought Hitler to power, and the Greeks are rightly not eager to put their country up for sale while committing themselves to penury.
But if Greece flips the "Eurozone" (i.e. Germania Redivivus) the bird what of the other PI(g)S? The prospect of a round of wholesale Argentine bird-flipping makes "investors" skittish, which means it costs Spain and Italy and Portugal higher and higher interest rates to borrow money which in turn require greater proofs of "creditworthiness" (ie. austerity) which only fuels the spiral downward to stagnation and poverty.
The only way out is to pump up the economies with a lot of hot air (aka inflation). Dollars and Euros and Yen may be worth less overall, but what counts is circulation. When money circulates, people buy things and when people buy things other people produce them -- and everyone is happy even if Keynes Koins are little more than gold tinsel chocolate dollars.
The United States in particular is hot to dust off ol' Maynard, because until she completes her volt face toward the Pacific, American goods still seek European purchasers and if the Old Worlde is eating beans, that doesn't bode well for the New. Next to Merkel, Obambi is positively socialistic!! But the Iron Dumpling is having none of it. Smiling and Frumpy she stood her ground; stalwart proof of what comes from being weaned on salted herring.
Whistling through the gaps, the G8 communique informed the rest of us that its member states (firmly) committed themselves "to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us."
Barely a tissue to cover the shabby.
The issue is simple. Germany (or more precisely, German banks and "private investors") are insisting on their pounds of flesh, which means that Greeks must commit themselves to eating beans for the next half century or so. It was this kind of "commitment" (aka the Dawes Plan) that once brought Hitler to power, and the Greeks are rightly not eager to put their country up for sale while committing themselves to penury.
But if Greece flips the "Eurozone" (i.e. Germania Redivivus) the bird what of the other PI(g)S? The prospect of a round of wholesale Argentine bird-flipping makes "investors" skittish, which means it costs Spain and Italy and Portugal higher and higher interest rates to borrow money which in turn require greater proofs of "creditworthiness" (ie. austerity) which only fuels the spiral downward to stagnation and poverty.
The only way out is to pump up the economies with a lot of hot air (aka inflation). Dollars and Euros and Yen may be worth less overall, but what counts is circulation. When money circulates, people buy things and when people buy things other people produce them -- and everyone is happy even if Keynes Koins are little more than gold tinsel chocolate dollars.
The United States in particular is hot to dust off ol' Maynard, because until she completes her volt face toward the Pacific, American goods still seek European purchasers and if the Old Worlde is eating beans, that doesn't bode well for the New. Next to Merkel, Obambi is positively socialistic!! But the Iron Dumpling is having none of it. Smiling and Frumpy she stood her ground; stalwart proof of what comes from being weaned on salted herring.
©Barfo, 2012
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