Posts Tagged Euro

Tragedy of the Euro

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How young he is! Philipp Bagus has written an excellent and interesting history of the Euro, which you can buy on the Ludwig von Mises Institute website or download for free from the same site.

Read a summary of the interview on the GoldMoney site here. Here’s an excerpt:

In this video Philipp Bagus, Assistant professor of Economics at Madrid’s Universidad Rey Juan Carlos and author of The Tragedy of the Euro, and Alasdair Macleod of the GoldMoney Foundation talk about the eurozone facing the problem that is characterised in the “tragedy of the commons” analogy. Bagus explains this phenomenon by way of an example of overfished and over-exploited oceans due to a lack of property rights on oceans. In Europe, governments run larger deficits than their “competitors” in order to externalise the costs to all users of the currency. Knowing these incentives, the Stability and Growth Pact was put in place as per the early 1990s Maastricht Treaty, capping budget deficits at 3% of GDP and the debt to GDP level at 60%. However there was no enforcement of these rules which is why there have already been more than 80 infringements to this stability pact without any repercussions.

They talk about possible solutions to the euro crisis. Bagus points out that there are basically three different

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Prepare for riots in euro collapse, Foreign Office warns – Telegraph

Mouse-tip to EX-SKF for the link:

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.

via Prepare for riots in euro collapse, Foreign Office warns – Telegraph.

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Eddie Hobbs – TV3 – The Euro Collapse

Here’re the key points, in case you have trouble with that lovely Irish lilt.

  1. “At the moment, economics is being run by politicians”. Since when hasn’t it?
  2. “a global financial event which will dwarf what happened after Lehman Brothers”
  3. “If Italy fails, we’re looking at economic Krakatoa”.
  4. “What is shows us is that the the whole Keynesian model … has been an utter failure.”

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To get out of debt, buy more debt!

Well, it is Hallowe’en, so I’ve underlined the scary part to make sure you get the shivers.

Japanese Prime Minister Noda offers vague promise.

 Prime Minister Yoshihiko Noda Japan on Friday offered vague promises that Japan will help Europe climb out of its debt hole, but left himself a week to decide how Japan might augment its already hefty contribution to the EU’s bailout fund.

Noda told the Diet that Japan stood ready to play its part in stabilizing the eurozone as it struggles to get a grip on a two-year crisis that has threatened to derail the global recovery.

Japan has so far purchased around 20% of the debt issued by the European Financial Stability Facility, the continent’s bailout fund, and has indicated its willingness to buy more.

Klaus Regling, head of the EFSF, was in China Friday amid speculation that Beijing would come to Europe’s rescue, although he insisted there had been “no deal.”

Looks like the Chinese said, “she-she but no she-she”:

The head of the European bail-out fund dampened hopes Friday that China Would come to a debt-stricken EU’s rescue, but left the door open for a deal with the world’s second-biggest economy.

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Japan ready to buy more Europe bonds if needed – Yahoo! News

Bizarro! Pure altruism? More likely neither, but self-interest, tho I can’t figure out why or how.

Can someone tell this guy that Japan just suffered an earthquake and tsunami. Quite a big one. Funds needed for reconstruction. And who will pick up the tab when (not if) the euro blows up?

TOKYO AFP – Japan is ready to buy more European bonds if needed to help support a eurozone shaken up by fiscal debt woes, the finance minister said Friday.Japan will invest more in European Financial Stability Facility EFSF bonds if needed, after purchasing some 20 percent of them issued since January, Finance Minister Yoshihiko Noda told reporters.”We’d like to contribute to the emergency lending facility at the same pace if that could help stabilise the economies of the EU,” Noda said.

via Japan ready to buy more Europe bonds if needed – Yahoo! News.

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