Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?

By Simon Johnson

The news from Europe, particularly from within the eurozone, seems all bad.  Interest rates on Italian government debt continue to rise.  Attempts to put together a “rescue package” at the pan-European level repeatedly fall behind events.  And the lack of leadership from Germany and France is palpable – where is the vision or the clarity of thought we would have had from Charles de Gaulle or Konrad Adenauer?

In addition, the pessimists argue, because the troubled countries are locked into the euro, there are no good options.  Gentle or even dramatic depreciation of the exchange rate for Greece or Portugal or Italy is not in the cards.  As a result, it is hard to lower real wages so as to restore competitiveness and boost trade.  This means that the debt burdens for these countries are likely to seem insurmountable for a long time.  Hence there will likely be default and resulting global financial chaos.

According to the September 2011 edition of the IMF’s Fiscal Monitor, 44.4 percent of Italian general government debt is held by nonresidents, i.e., presumably foreigners (Statistical Table 9).  The equivalent number for Greece is 57.4 percent, while for Portugal it is 60.5 percent.  And if you want to get really negative and think the problems could spread from Italy to France, keep in mind that 62.5 percent of French government debt is held by nonresidents.  If Europe has a serious meltdown of sovereign debt values, there is no way that the problems will be confined just to that continent.

All of this is a serious possibility – and the lack of understanding at top European levels is a serious concern.  No one has listened to the warnings of the past three years.  Almost all the time since the collapse of Lehman Brothers has been wasted, in the sense that nothing was done to put government finances on a more sustainable footing.

But perhaps the pendulum of sentiment has swung too far, for one simple and perhaps not very comfortable reason.

There is no way to have just a little debt restructuring for Italy.  If Italian debt involves serious credit risk – i.e., a nonzero probability of default – then all sovereign debt in Europe will need to be repriced, downwards.  There is a notion that Germany will remain a safe haven, but even that is far from clear.  According to the IMF, gross government debt in Germany will be 82.6 percent of GDP at the end of this year (Statistical Table 7 of the IMF’s Fiscal Monitor; the net government debt number for 2011, in Statistical Table 8, is 57.2 percent).  Reports of German fiscal prudence have been greatly exaggerated.

There is no way that the German policymakers or the German public will do well in the event of a major sovereign credit disaster.  Credit would tighten across the board.  German exports would plummet.  The famed German social safety net would come under great pressure.  If Germany had to call in the International Monetary Fund for advice, even informally and behind the scenes, how would that feel?

And they have an alternative – allow the European Central Bank to provide “liquidity” support across the board to the troubled governments.

There are many things wrong with this policy – and it is exactly the kind of moral hazard-reinforcing measure that has brought us to the current overindebted moment.  None of us should be happy that Europe – and the world – has reached this point.

Among others, the bankers who bet big on moral hazard – i.e., massive government-backed bailouts – are about to win again.  Perhaps the Europeans will be tougher on executives, boards, and shareholders than the Obama administration was in early 2009, but most likely all the truly rich and powerful will do very well.

But if your choice is global calamity or – effectively – the printing of money, which would you choose?

The European Central Bank has established a great deal of credibility with regard to keeping inflation at or close to 2 percent.  It could probably offer a great deal of additional support – through creating money – without immediately causing inflation.  And if the ECB is providing a complete backstop to Italian government debt, the panic phase would be over.

None of this is a lasting solution, of course.  Europe needs a proper fiscal center – much as the United States needed in 1787 and got under Alexander Hamilton’s policies from 1789.  Hamilton remains a controversial figure in US history but when he took over the US was in default and the credit system was almost completely broken.  Some centralized tax revenue and control over fiscal deficits

Mr. Berlusconi stood in the way of all this.  There is no way that the other Europeans would trust him to tighten Italian fiscal policy.  But if he is really gone from power – and we should believe that only when we see it – there is now time and space for Italy to stabilize and, with the right help, find its way back to growth.

Of course, if the ECB provides unconditional financial support to Italian or other politicians who refuse to bring their deficits under control, then we are heading for another Great Inflation.

An edited version of this post appeared this morning on the NYT.com’s Economix blog; it is used here with permission.  If you would like to reproduce the entire post, please contact the New York Times.

82 responses to “Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?

  1. Gov Perry, name the five members of p.i.i.g.s. which he responded, I can name at least three after I sober up…..

  2. Germany needs a serious bash on the head.

    It should have bowed out of the Euro months — years? — ago.

    Too many bureaucrats kicking the can. Too little time. Too big a mess. ….Lady in Red

    PS: Here’s Ambrose Evans-Pritchard on the matter, today:

    http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100013218/sorry-there-is-no-euro-break-up-plan-yet/

  3. “But if your choice is global calamity or – effectively – the printing of money, which would you choose?”

    Like any central bank, the ECB will choose the former followed by the latter.

    It’s just what they do.

  4. @Prof Johnson, “Hence there will likely be default and resulting global financial chaos.”

    Wow, can you flunk them in *math* class? :-)

    “Among others, the bankers who bet big on moral hazard – i.e., massive government-backed bailouts – are about to win again. Perhaps the Europeans will be tougher on executives, boards, and shareholders than the Obama administration was in early 2009, but most likely all the truly rich and powerful will do very well.”

    So basically, the banks took it upon themselves to redefine their core business without filing an amendment to their incorporation status – meaning, they bet on the moral hazard resulting in global financial crisis because in getting to that goal, they had channeled all the rivers of money circulating for LIFE-maintenance into some software program – basically an “inbox” on their phone – I believe that it’s less than 200 *beings* based on data Woych and/or Woop provided previously….

    Gee, if this were a TV crime drama show, the detective would want that cell phone as *evidence* of massive theft/fraud/pre-emptive war.

    This is completely unacceptable for 2011 – the BELIEF that, somehow, this is our doom because the 200 are so *powerful* – in what way are they so *powerful*?

    MERS has 50 people goofing around and pretending they really are in control of 6 million mortgages when all that MERS was set up to do was to foreclose on all 6 million – is it that kind of *powerful*…? I’m seriously asking – what’s this *power*….?

  5. How does the share of Italy’s gov’t debt held by foreigners given in this post rhyme with the “the big picture” from NYT, referenced by Simon a couple of weeks ago?

  6. You kind of survey the edges of the problem here, without identifying the core.

    The solvent parts of Europe face a catastrophe if they don’t bail out the bankrupt parts, but if they do fund a bailout without installing a means to control spending then the bankrupt parts will just waste the money and drag us all inexorably back into the same mess. Europe has shown it has no credible way to even begin restraining the spending of its profligate states, ergo a European financial and economic collapse is inevitable.

    You’re right that Europe’s bankers will have its hapless politicians over a barrel for a moment on the way down, and will use that to their advantage as their counterparts did in the US, but that’s pretty much a sideshow (as are both Berlusconi and the lack of a ‘proper fiscal center’) when compared to the main event.

    The tragic part of this story is that Merkel, Sarkozy and a relatively tiny number of bureaucrats in Brussels have finally managed to use this crisis to seize effective control of the EU enterprise, only to discover that while they can grab the steering wheel they have no idea how to keep the engine working.

  7. A great inflation requires nominal value of demand to exceed nominal value of supply, requiring an increase in the nominal value of supply or an increase in the real amount of supply.

    Expansion of nominal demand to a large extent requires either a constant relationship between the monetary base and broader money supply growth, an expansion in broader money supply growth relative to the monetary base or an increase in the velocity of narrow money supply measures.

    If all monetisation does, is to compensate for a collapse in the stock of broad money supply, we still have a deflationary risk.

    If banks are not lending then we need to increase the velocity of the current narrower money supply components, in other words get consumers to spend more money.

    If asset values have fallen, unemployment is high and economic growth declining or growing very slowly, then consumers may be more likely to tend towards austerity. This leaves governments and central banks to generate demand, printing money and putting stress on the ability of supply to meet demand.

    To do this could require an enormous amount of monetization – central banks create new money out of thin air, buy vast amounts of government debt, and governments spend vast amounts on economic projects, tax cuts etc. Governments may no longer be able to sell debt to anyone outside of the central bank fraternity; government budget deficits and national debt will likely grow much further and there is a risk of a significant misallocation of resources.

    Tremendous amounts of capital may be destroyed as demand shifts to different economic sectors and real economic growth will trickle to a halt as new capital is allocated to areas with potentially lower real growth prospects and debt/capital previously allocated to effectively non-performing assets act as a drag on growth itself.

    Both nominal and real assets will lose value, but inflation may well pick up. The risk is that the economy moves even further away from a natural structural imbalance, risking tremendous long term damage to real growth and living standards.

    This is the end of capitalism and risks a move closer to an Orwellian climax!

  8. natrual structural balance – not natural structural imbalance

  9. Anyone think that Italy’s deficits might instantly double when a new regime ‘adjusts the facts’?

  10. As I understand it, for Greece, (at a minimum), the shysters at Goldman Sachs provided expert guidance to Greek ministers in the art and science of concealing, disguising, and depicting a false representation of real sovereign debt level, etc.

    This is financial fraud where I come from.

    The Greeks should engage good lawyers and sue Goldman Sachs, and attempt to recover compensation for this scheme.

    In the meantime, declare a debt moratorium, or face generations of lost opportunities, hope, health, parents and grandparents, while being enslaved to bond-holders, the IMF, central banks, and international banks.

    Say no austerity my fine European comrades.

    And Simon, our decent blogster, the world is already a calamity, but I say let the bankers go to hell, where they belong.

  11. @Woop – no one has the *RIGHT* to tell Western Civilization to face lost generations and opportunities.

    And certainly not – in 2011 – some *power* voice coming from inside the rancid offals of that historic and chronic death epidemic that Europe hasn’t found a vaccine against – da banksters!

    The 99% is not the 1%. Seems like good odds to me…

    Why don’t the Koch brothers and other political power buyers run for the Presidency themselves? Since they are at the final table – what *law* are they re-writing now? Everyone else has to show their cards except for them? “You can’t *see* my derivatives, that’s the LAW!”

  12. Exactly, Annie. The Koch heads are too busy making $$$ to serve the nation, which serves only a platform on which to exercise unbounded greed, which includes ruining the middle class…..the *siphoning off*, as you have often pointed out.

    The 1% own the thugs and the weapons, and the secret technology that can do odd things to engine blocks and steel, so, really, aren’t all the cards now in possession of the dark side?

    I sure think so.

  13. Could someone from The Baseline Scenario please fill in the missing sentence(s) of this blog? Second to last paragraph ends with an incomplete sentence. Looks like there might be more after it, as well.

  14. Italy should consider safeguarding their debt with Jon Corzine, the former head of MF Global. He’ll lose the accounting records… problem solved.

  15. Edward, true that….he could manage removing the 3-dimensional record just outside the black hole, and then the 2-dimensional *copy* kept on this planet would go away, too.

  16. Bruce E. Woych

    Activists Beyond Borders: Advocacy Networks in International Politics [Paperback]
    Margaret E. Keck (Author), Kathryn Sikkink (Author

    Activists Beyond Borders: Advocacy Networks in International Politics

  17. @woop, “The 1% own the thugs and the weapons, and the secret technology that can do odd things to engine blocks and steel, so, really, aren’t all the cards now in possession of the dark side?”

    Yeah, well, that’s the thing about science that most people forget, same technology in different hands for a different use, and the dark side loses in a fair fight.

    I’ll bet the dark side didn’t even invent it, so that’s why they’ll lose it.

    But cool beans techno – eh? I can see a Hollowood movie already – Mexico City is months away from being blown up by the gas and lava released its way after an underground oil field that was sucked dry collapses (a seizing car engine situation – what happens when there’s no oil to handle the heat). Your device can seal a tunnel that will divert the natural buster bunk bomb out to the Gulf of Mexico – that should finish off that body of water full of life for a millenia…

    and the banksters would still find a way to make money off of that, wouldn’t they – place your bets….

  18. Bruce E. Woych

    Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?
    Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?
    Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?
    HUH??????

    Thursday, November 10, 2011
    A Financial Coup d’etat in the Making?
    By Marshall Auerback

    It is said that the European Union is a remarkably inefficient organization in terms of organizing economic rescue packages, but when it comes to subverting democracy, they are as ruthless and efficient as a well-oiled crime syndicate.

    read this NOW!

    http://neweconomicperspectives.blogspot.com/2011/11/financial-coup-detat-in-making.html#more

    http://neweconomicperspectives.blogspot.com/2011/11/financial-coup-detat-in-making.html#more

    http://neweconomicperspectives.blogspot.com/2011/11/financial-coup-detat-in-making.html#more

    Wake up Simon: This ain’t Kansas anymore!

  19. The US Congress Super Committee should be shaking in its boots. The handwriting is on the wall. Sadly, the President’s idea of infrastructure building as stimulus has (for no explicable reason) taken a hit, and yet, what that means is the there will be no more road down which to kick cans. What is happening is that we and Europe are blessed with massively overleveraged, mammoth banks which can no longer be bailed out, and which, once the Euro Domino serie starts to slide seriously south, will not survive, and no one will have the funds with which to bail them out, even if we or they (the Europeans) wanted to. Meanwhile back at the leadership conference, behind closed doors, the various world leaders were taking Nero’s crash course in advanced fiddling so as to understand how to continue to do nothing and try to find somewhere to hid there billions which won’t be worth the paper they’re written on after the music stops. And, we, the public, the 99%ers, continue to follow the latest Presidential Primary food fights, which are actually about as meaningful as any trash television show I can think of. It is truly a bizarre world we live in. I have just finished reading Naomi Klein’s book The Shock Doctrine (recommended to all who really want to understand how we got here). My previous book was Michael Lewis’s Boomerang (recommended to all who want to know why the Europeans are culturally predisposed not to resolve their fiscal marriage due to irreconcilable differences), and I’m now reading Top Secret America by Dana Priest and William M. Arkin (recommended to any who want to know why we are so incredibly far in the hole fiscally — this is truly the tip of the giant iceberg that was the Military Industrial Complex and now has massively expanded).

    Bottom line: It’s going to be a very long, cold winter which will feel much like Nome did the last couple of days.

  20. Bayard, always cool reading you on these pages: I may pick up some of your reading suggestions, btw.

    I certainly agree with your observations, esp. the very long cold winter……and the feeling of isolation on people who are realizing the current dissolution and disintegration is terminally here.

    Stay in touch with the good posters here at Baseline, my advice.

  21. The cause of the crisis in almost a tweet

    The interest rate a bank charges on a loan already contains most of the risk-weighting derived from the ex-ante perceived risk of default of the borrower. The amount loaned, its maturity and the collaterals required reflect the rest of those perceptions.

    And that is why when the bank regulators also based the capital requirements for the banks on the same ex-ante perceived risk of the borrower, they doubled counted it… and that is why we now have an enormous bank crisis derived from gigantic exposures to what ex-ante was considered to have no or very little risk of default. Is this so hard to understand?

    Seemingly, almost four years into the crisis the regulators still does not understand his mistake … that is unless he does but does not want it to be discussed.

    Before discussing its inflation or deflation, should not a Simon Johnson understand better why Europe got into this bind? Come on! The Basel Committee authorized the banks to leverage their equity when lending to Greece or Berlusconi… more than 60 times!

    Here’s a link to… Who did the eurozone in? http://bit.ly/t3mQe0 As you will read, it really was the butlers.

  22. Speaking of Europe, here’ an Irishman discussing the problems of Ireland, and elsewhere.. : )

    http://www.zerohedge.com/article/irishman-speaks-his-mind

  23. It really was not the butlers, the euro was doomed from the start, the timer was the only question. And why did I hear that the greek debt is solely and completely owned by greek banks (there is no 57.4% here people). The problem with paper money is that a few [countries] can overwhelm the masses with a very small percentage of that paper, yet somehow future generations fall victim to yesterdays shnanigans. The Italian debt is massive and coming due the first(day)of the next year. Any haircut will trigger soverign derivitives default, and payment will continue to contribute to a free world monetary inflation. Tip of the day: Never let your feet run faster than your shoes.

  24. @ Annie, they made (tons) $$$ off the Gulf didn’t they, shorting BP, and Halliburton acquiring a clean up firm, and all COREXIT 9500 poison spewing incessantly in the dead of night? All really questionable transactions because of timing and other independent variables…

    All things being equal, I’d rather go up against a vampire, because I believe I understand the weakness.

    Unless these guys have a “jump room” to another planetary situation as good as earth, I would submit such actions are as harmful to them as they are to the rest of us, over time.

    Psychos in bondage to a time-immemorial Satanic Principle, what else can it be?

  25. The real issue here is of a closed currency system. A monetary union without a fiscal union is analogous to countries borrowing in another countries currency. So, Italy is in trouble almost exclusively because it borrows in a currency that it doesn’t control.
    Europe’s only real choice is between a fiscal union and a return to multiple currencies. How we get there and the pain involved will depend on the authorities. the ECB has ruled out playing lender of last resort, the political will for a transfer union does not exist and there isn’t a single European identity. That suggests a painful path involving default and exit is more likely.

  26. The real issue here is of a closed currency system. A monetary union without a fiscal union is analogous to countries borrowing in another countries currency. So, Italy is in trouble almost exclusively because it borrows in a currency that it doesn’t control.
    Europe’s only real choice is between a fiscal union and a return to multiple currencies. How we get there and the pain involved will depend on the authorities. the ECB has ruled out playing lender of last resort, the political will for a transfer union does not exist and there isn’t a single European identity. That suggests a painful path involving default and exit is more likely.

  27. Of course it was and is a somewhat nutty system to begin with…. but it was made truly lunatic by allowing the banks to lend to the sovereigns almost unlimited. Had it no been that way the interest rates would have sent their signals way before.

  28. But if your choice is global calamity or – effectively – the printing of money, which would you choose? – Simon Johnson

    MAD policy making once more that renders immoral hazard moral. Better to plunder some more rather than face the tough medicine from collective action, eh Simon?

  29. In what respect are individual, say, greeks responsible for greece’s debt? If a greek citizen leaves the country, are they off the hook? If all Greeks leave the country, is the debt canceled? If another group of people move into the geographic area that was Greece, do they own the debt now? Is the whole “low risk” concept of sovereign debt based on the notion that the debt follows the people, the government, or the land? Can’t Greece “overthrow” its constitution and set up a new one and thus escape it s debt? Oh, sorry, we are the old Greek government anymore.

  30. Prof. Johnson is quite correct in arguing that a desperation-induced ECB policy of money printing would = moral hazard + inflation risk. The further lesson: Keynesianism, the catechism of money printing and the erstwhile “magic bullet” for capitalist stagnation, comes at the cost of corrupting the patient. –The “liberals” (reformists, such as Krugman, Stiglitz, & Jms. K. Galbraith, all Keynesians) always seem to forget this; then they wonder why “their ” government’s results eventually and always prove to be as rotten as the “conservative” alternative. (Next they promise: Trust us, and follow us yet again . . . .)

  31. As the banks, many German, lent so much to Greece at rates so ridiculous low that no Greek would ever lend to its own government, and therefore the Greeks took out about 200bn Euros, much of which might be invested in the Bundesbank of Germany… no one is really sure of who is in the worst shape.

  32. Bruce E. Woych

    @ Per Kurowski: You speak generally about the “Greeks” as an aggregate.

    Who received what in Greece in these transactions (real identities and entities) ; specifically who gained and for what reason? Would you assess that they sold out their country and countrymen?

    The corollary to this is who specifically gained from the lending side (real names); and could this be a high tier level of predator lending practices that should have consequences in the overall assessment of all this financial fiasco gone terribly wrong. Finally, isn’t it true that the aggregate “people” of Greece are simply surrendering another deeper layer of their country into this debt trap (which is essentially the same spiraling practice that started all this?

    Would you give your opinion on splitting global finance into two tiers of financial services. The upper tier with a certain “credit history” can operate at the easier fiat level of minimum asset requirement

    The second middle tier has more asset requirements according to their history;

    While the bottom tier requires a hard standard peg of gold or silver itself.

    Why shouldn’t we demand collateral from these agencies and brokers of misery from perverted incentives and moral hazard which we have seen so blatantly in real world events.

  33. The funds went into the Greek economy in general and the funds were taken out by some Greeks who had the resources… this happens everywhere… luckily… otherwise those funds would have been lost fueling Greek inflation or other misuses

  34. @no one is really sure of who is in the worst shape.

    We are fairly sure that the ones in the worst shape are the ones who have the most exposure to paper money. That would be Italy, Germany, the UK, Japan, and finally the big kahuna, the US of A. All the others are small potatoes representing the larger fish of their commenality. Its as simple as that.

  35. Lew Glendenning

    Yes, you can have both a great depression and a great inflation, simultaneously.

    Once again, I see ‘deflation’ used to mean both the opposite of inflation and a business slowdown. Once again, I see this usage as meaning ‘inflation cannot happen in a business slowdown’.

    Sorry, we can have both double-digit inflation and double-digit unemployment, as the 80s proved in the US.

  36. Europe is on the verge of COLLAPSE. And as goes Europe, so goes the rest of the global economy. At this point anyone who doesn’t get it, NEVER will.

    “This is from Der Spiegel: ‘Run for your lives’ is the new motto in Europe, and not just among banks and insurance companies, which are selling off southern European bonds as quickly as they can, but also among ordinary holders of savings accounts. Banks and regulatory agencies are noticing that anxious citizens throughout Europe are trying to bring their money to safety. The flight of capital from Italy, Spain and Greece is in full swing.”

    http://www.counterpunch.org/2011/11/11/europes-crash-landing/

  37. @ Anoymous, I can’t recall seeing a more sobering report on the dire situation in the Eurozone, particularly with respect to our Italian friends……pretty frikken dire…..I must say.

    This piece reinforces what our PER has been saying here a long time……the perceived risk of lending to sovereigns was completely wrong……and now the consequences of getting this wrong are enormous.

  38. “Is Europe On The Verge Of Another Great Depression – Or A Great Inflation?”

    If that is the choice, hopefully the latter. :)

  39. Professor Johnson says “… the lack of understanding at top European levels is a serious concern. No one has listened to the warnings of the past three years. Almost all the time since the collapse of Lehman Brothers has been wasted, in the sense that nothing was done to put government finances on a more sustainable footing.”

    And he’s complaining about EUROPE?

    Exactly who “at top levels” has been listening on this side of the Atlantic?

    It boggles the uneducated, unsophisticated mind of a middle class woman in Cleveland, Ohio. And if that doesn’t shame the financial and political elites, what the hell will?

  40. The European Central Bank must print more money because the calamity that would ensue is far more detrimental in terms of recession and depression than having to deal with inflation. Inflation is a natual occurring event anyway within established economies.

    Print more money wisely. Signs of inflation has already crept in to commodity prices which could be due to tightened money supply due to current bank lending policies in response to the financial crisis. Though it is as easy as revving up the print presses it should come with caveats. Italy, Greece and Portugal should issue bonds at rates tied to GDP growth to its residents only. This should play a contributing factor in the amount of money printed into their respective economies.

  41. What is now unfolding in Europe should horrify every awake person:

    “Both Greece and Italy will be ruled by so-called ‘technocratic’ governments. Even though both Greek prime minister George Papandreou and Italian prime minister Silvio Berlusconi were elected comfortably in parliamentary polls and were never defeated in any vote of confidence in parliament, they have been ousted – to be replaced by unelected ex-central bankers and former executives of hedge funds and investment banks. From now on, financial markets will rule directly over the lives of the Italian and Greek people.”

    http://www.globalresearch.ca/index.php?context=va&aid=27637

    “Cutting through the Orwellian Newspeak* of the media, this means that the people of Greece, Italy, and Argentina must pay for the mistakes of bankers and corrupt governments, suffering higher taxes, unemployment, lower wages and pensions, and a deterioration in public healthcare, education, and infrastructure.”

    http://www.globalresearch.ca/index.php?context=va&aid=27646

  42. Can we at least try to get us some good and courageous technocrats please!

    Besides the issue of legitimacy… having technocrats could be good… unless of course they are failed technocrats… and frankly most of the European and American technocracy, in the area of finance, have failed miserably.

    Technocrats who never understood, and still fail to understand, that the risk-weights used for determining the capital requirements for banks that based on ex-ante perceived risk of default, were layered on top of the banker’ own risk-weights, which drove the banks to create dangerously high exposures to what is officially perceived as “not-risky”, are not worthy being called technocrats… no matter how revered they might be in Brussels.

    At this time, when we all need the risk-takers to work for us, they are being choked by the lack of access to bank credit… just because these failed technocrats believe them to be risky. Come on, these were the regulators who believed sovereigns to be safe! Are we still supposed to blindly follow their courageous calls for entering their land of no-risks?

    These wimpy technocrats –bureaucrats, who demonstrated even less courage than many politicians, and who are in fact more responsible that most politicians for this crisis, do not seem to be the leaders we now need!

  43. You will get there mostly what we got here in 08. A Geithner or Paulson who will do as their cohorts/and he wants, and that must be to inflate your way out. Anyone not on board will be asked politely(w/gun at head) to leave of face their consequences. A new round of price inflation shall insue and they only ones left out(from the financial fun) will be the middle and lowers classes, who have little benifits from a generous land of gvts. The chain of thought is, you can’t hold an economy hostage to unreasonable thinkers.

  44. @Anonymous

    Yes, it is clear what the fetish-based religion is:

    “…In the beginning there was $$$$, and then came LIFE….”

    We need to start LAUGHING them out of their perch – let *wit* rule like in the court of Louis XVI (French movie “Ridicule” for an example)….

  45. If someone lends money to someone who doesn’t pay it back they should take the assets that were pledged for the loan. Let the bondholder own the Pantheon and other Greek assets (railroads). The same should happen in Italy, Portugal, and Ireland. The bondholders can then sell these assets to businessmen who can make a profit with them. Isn’t this the way Capitalism works? Where did the idea that taxpayers were suppose to pay for the default of borrowers originate? This concept is crazy.

  46. “Let the bondholder own the Pantheon and other Greek assets (railroads). The same should happen in Italy, Portugal, and Ireland. The bondholders can then sell these assets to businessmen who can make a profit with them. Isn’t this the way Capitalism works?”

    Bonds are not risk-free despite whatever fictions the banks and other holders observed. Only crony/bankster/ponzi capitalism works by privatising the gains and socialising the losses.

  47. Bruce E. Woych

    Anonymous: This is one of those moments where you have to remember who you are dealing with, and perhaps you might ask yourself where that “law of capitalism” was ever constructed…I hear it a lot from Wall Street reptiles. In any case, perhaps the Coasters can provide more guidance in this matter of having Greece sign over their heritage to banksters and …well here’s some history to this business cycle: ( but remember what Dylan stated early on…Something is happening here;…but you don’t know what it is….do you…MR. JONES!
    Coasters – Along Came Jones.wmv
    mh4272

  48. Bruce E. Woych

    Robin Hood Tax Gains Ground at the G-20
    Submitted by Mary Bottari on November 4, 2011 – 05:49

    http://banksterusa.org/content/robin-hood-tax-gains-ground-g-20

    Nurses Hold Geithner’s Feet to the Fire

    “The news reports hit the wire almost at the exact same moment that thousands of nurses took the fight for a fair economy right to Tim Geithner’s doorstep with signs demanding “An Economy for the 99%” and “Tax Timmy’s Friends.” Nurses and other groups are fed up with Geithner’s soft pedaling every action that might hold the big banks accountable for the meltdown of the global economy. The noon rally at the Treasury marks an increased effort by unions to convince the Obama administration that more needs to be done to fix the country’s broken financial system and create jobs.”
    more (a lot more):

    http://banksterusa.org/content/robin-hood-tax-gains-ground-g-20

    Robin Hood Tax Gains Ground at the G-20
    Submitted by Mary Bottari on November 4, 2011 – 05:49

  49. “Almost all the time since the collapse of Lehman Brothers has been wasted, in the sense that nothing was done to put government finances on a more sustainable footing.”

    “there is now time and space for Italy to stabilize and, with the right help, find its way back to growth.”

    Where is such growth to come from in the current balance sheet recession? Surely you don’t agree with the notion that austerity will bring growth? It seems to me the only sensible answer is to have creditors acknowledge that the debt is not going to be repaid, either directly, or indirectly by having the ECB buy up the stuff. I think in the final analysis, they will realize that the attempt to deny and delay is not going to work. Since direct default does not appear to be achievable, I think the ECB will end up inflating by buying the bad debt, despite the German aversion to inflation.

  50. Greece relinquished its’ national assets/treasures so that banks would not realize losses with respect to its’ bond holdings. The Greek people now face wage and benefit reductions that are substantial, pension cuts, layoffs, and higher costs for basic necessities.

    Greece is now enslaved, by design. The design was fraudulent, and criminals gamed the system, but average Greeks are now paying the price.

    Banksters should be facing long prison sentences who do these criminal swindles, but instead its’ profit and loss statementa are flush, its’ key employees compensated with incredible pay and bonuses, and I wonder how long can this continue to flourish without recourse to barbaric lamp post hangings?

  51. Woop, our SS bennies don’t start until age 62 and the most you can get is $24,000 per year. In Greece they retire at 52 and can recieve up to $48,000 per year. They can afford cuts backs and more before they reach the level the US currently has. And we can’t afford ourselves in the future so how can they afford themselves today? The real question is how did they get to the point of such early retirement and is anyone really interested in continueing to financeing it. Not here, not me.

  52. Hi Owen, Show me factually where your numbers are true and correct?

  53. Bruce E. Woych

    Check out the update on Greece here: the comments are not only intelligent but very informative:

    http://www.commondreams.org/headline/2011/11/14-1

    Published on Monday, November 14, 2011 by Reuters / AP
    Greek Coalition Partner Refuses to Back Austerity

    “Greece’s new prime minister is to present his policy platform ahead of a midweek confidence vote in parliament…..”

    http://www.commondreams.org/headline/2011/11/14-1

  54. Bruce E. Woych

    Austerity and the Destruction of Democracy
    Rob Johnson: Austerity policies in Europe threaten a deformation of democracy and the rise of ultra-nationalist forces
    Go to story

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7102

  55. Bruce E. Woych

    http://www.dw-world.de/dw/article/0,,15515614,00.html

    Germany rejects G20 proposals that would see national central banks contribute reserves to an IMF-backed vehicle designed to boost the financial firepower of the eurozone rescue war chest.

    German gold reserves are worth almost 140 billion euros

  56. “Noted American economist Nouriel Roubini says the eurozone is in the midst of crumbling, and with the rest of the world’s future at stake with a potential collapse, they might want to listen up — Roubini has been right before.”

    http://rt.com/usa/news/roubini-eurozone-collapse-world-587/

    “Last week economic expert Nouriel Roubini reportedly said that the collapse of the eurozone was imminent and the crumbling of the international economy would follow in due time. Now, days later, Roubini is warning of a disaster on Wall Street.”

    http://rt.com/usa/news/roubini-sachs-global-mf-861/

  57. Woop, ya know if people believed everything they were shown and taught in this country, they would be in a nightmare situtation currently. Oh yea, 99% are. I heard it from an extremely reliable source, it was a financial channel on TV, the same one that directed me to this financial web site some time back. Go on needing the absolute truth from sources though, don’t let me stop you. And there must be something google can dig up about it if you really feel lost about the information.

  58. “For what it’s worth, the average Greek retirement age is nearly 65. Some Greeks that I know who take up their retirement funds early, usually receive between 200 and 600 per month. At that point, sitting on your ass is not even an option. These people have to immediately find employment elsewhere, usually more than one job.”

    “Yes, there are Greeks benefiting from high and early retirement. They are an exception, not the rule.”

    http://roarmag.org/2011/06/greek-debt-crisis-international-media/

  59. That might be the avarage, but the supposed ability to retire and collect the said sum usually applies to mostly those who don’t really need it, but feel the need to invest it. At such sums as which can not be financially sustained today, especially with the paltry rates offered now. Todays talk that the rise to 7% rate suggests your country is one the verge of default totally overlooks the @15% 30 year rates comming due now, I don’t see where you can now some how afford that and spark up the investors at 3 or 4 percent?? Tip of the day: Do some homework before investing money.

  60. Bruce E. Woych

    Currency Wars: The Making of the Next Global Crisis (Portfolio) [Hardcover]
    James Rickards (Author

    Currency Wars: The Making of the Next Global Crisis (Portfolio)

  61. Bruce E. Woych

    http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs

    “Mario Monti, Lucas Papademos and Mario Draghi have something in common: they have all worked for the American investment bank. This is not a coincidence, but evidence of a strategy to exert influence that has perhaps already reached its limits.”
    Economy
    European Union
    Our friends from Goldman Sachs…
    16 November 2011
    Le Monde
    Paris

    http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs

  62. More than so they are all failed regulators!

  63. @ Owen, so “google it”….this is your FINAL answer?

  64. “technocrats” = “bankers”………Greece and Italy, y’all being CONNED, again, sorry.

  65. Affirmative Woop, can I pass over the bridge now and look for the grail?

  66. Printing now simply creates a bigger calamity later. The calamity is only for rentiers, not productive enterprises. Numerous times in history have paper currencies collapsed and peoples resorted to scrip to conduct trade until bankers got back into the game.

    Debt writedowns (the proper solution) need not even entail currency collapse.

  67. Bruce E. Woych

    Debtocracy | Watch Free Documentary Online
    Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. …
    topdocumentaryfilms.com/debtocracy/

    http://topdocumentaryfilms.com/debtocracy/

    2011 Economics
    DebtocracyFor the first time in Greece a documentary produced by the audience. Debtocracy seeks the causes of the debt crisis and proposes solutions, hidden by the government and the dominant media.

    Debtocracy is a 2011 documentary film by Katerina Kitidi and Aris Hatzistefanou. The documentary mainly focuses on two points: the causes of the Greek debt crisis in 2010 and possible future solutions that could be given to the problem that are not currently being considered by the government of the country.

    http://topdocumentaryfilms.com/debtocracy/

  68. Bruce E. Woych

    http://rwer.wordpress.com/2011/11/18/will-the-euro-be-destroyed-by-ideologues/#respond

    Will the euro be destroyed by ideologues?
    November 18, 2011
    from Dean Baker

    “We could be living through the last days of the euro. That is not a happy thought. While there were many negative aspects to the rules governing the European Central Bank and the eurozone economies, no one can want to see the economic chaos that will almost certainly follow the collapse of the euro.

    There will likely be a wave of bank collapses as banks are forced to write down much of the debt they hold in Italy, Ireland and other heavily indebted countries…”

    http://rwer.wordpress.com/2011/11/18/will-the-euro-be-destroyed-by-ideologues/#respond

  69. Bruce E. Woych

    http://hellasfrappe.blogspot.com/2011/11/video-report-msnbc-how-goldman-sachs.html

    “Commenting about Greece’s debt crisis on a panel discussion on Dylan Ratgan’s show on MSNBC last night, investigative reporter and author of the book “Vulture’s Picnic” Greg Palast said that what happened in Greece is not about a loan (s), but in fact it is “about a crime” that was committed on the backs of the Greek people by the banks.”
    [and Related Post…same page link …scroll down to bottom of the page for more video selections]

    http://hellasfrappe.blogspot.com/2011/11/video-report-msnbc-how-goldman-sachs.html

    HOW GOLDMAN SACHS SACKED GREECE

  70. Bruce E. Woych

    AS POSTED AND REFERENCED @ http://richardbrenneman.wordpress.com/author/richardbrenneman/
    BY the compilers of “eats shoots ‘n leaves”
    16422
    by richardbrenneman

    http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html?origin=internalSearch

    What price the new democracy? Goldman Sachs conquers Europe

    While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation
    by Stephen Foley, Friday 18 November 2011;
    “…By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic.”

    Headline of the day: EU, Goldman Sachs subsidiary
    Posted on 2011 November 19 | Leave a comment

    From a stunning report in The Independent by Stephen Foley:

    What price the new democracy? Goldman Sachs conquers Europe

    Among those he lists with ties to the archetypal Wall Street monster are:

    Lucas Papdemos, the new bankster-installed Greek Prime Minister who cooked up dericatives deals with Goldman Sachs to hide the true size of the national debt while heading Greece’s central bank.
    Petros Christodoulou, head of the Greek debt management agency and a former Goldman Sachs bankster.
    Mario Monti, the bankster-installed Italian Prime Minister, was an international adviser to Goldman Sachs.
    Antonio Borges, a Parisian who has just left his post as boss of the International Monetary Funds European unit, and a former vice chair of Goldman Sachs.
    Peter Sutherland, former Irish attorney general and leading proponent of the Irish bail-out, and a former director of Goldman Sachs.
    Karel van Miert, a Belgian who served as the European Union’s Competition Commissioner and as an international adviser to Goldman Sachs.
    Otmar Issing, a German who played a key role in creating the euro and served on the boards of the Bundesbank and the European Central bank, and as an international adviser to Goldman Scachs.
    Mario Draghi, who served as managing director of Goldman Sachs before taking his new job as head of the European Central Bank.

    Hmmm. One begins to sense a pattern, no?

    → Leave a comment

    Posted in Banksters, Deep Politics, Economy, Europe, Finance, Wealth

    *****AS POSTED AND REFERENCED @

    http://richardbrenneman.wordpress.com/author/richardbrenneman/

    BY the compilers of “eats shoots ‘n leaves”
    16422
    by richardbrenneman

  71. Bruce E. Woych

    http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html?origin=internalSearch

    What price the new democracy? Goldman Sachs conquers Europe

    While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation
    by Stephen Foley, Friday 18 November 2011;

    This is a full and very detailed article; the synopsis extracted above is compiled from the article.

  72. Everyonen works in a great inflation, more working, more to divide. It is also can be called backdoor austerity.

  73. All eyes on Europe as China sends all the dominoes toppling. End-game.

    “Global economic outlook grim, China tells U.S. trade talks”

    http://www.reuters.com/article/2011/11/21/us-china-usa-economy-idUSTRE7AK0BD20111121

  74. Bruce E. Woych

    http://www.truth-out.org/occupy-colleges-now-students-new-public-intellectuals/1321891418

    Published on Truthout (http://www.truth-out.org)

    Occupy Colleges Now: Students as the New Public Intellectuals
    Monday 21 November 2011
    by: Henry A. Giroux, Truthout | News Analysis
    (excerpt)
    “The police violence that has taken place at the University of California campuses at Berkeley and Davis does more than border on pure thuggery; it also reveals a display of force that is as unnecessary as it is brutal, and it is impossible to justify. These young people are being beaten on their campuses for simply displaying the courage to protest a system that has robbed them of both a quality education and a viable future.

    Finding our way to a more humane future demands a new politics, a new set of values, and a renewed sense of the fragile nature of democracy. In part, this means educating a new generation of intellectuals who not only defend higher education as a democratic public sphere, but also frame their own agency as intellectuals willing to connect their research, teaching, knowledge, and service with broader democratic concerns over equality, justice, and an alternative vision of what the university might be and what society could become.”
    (Read it ALL)

    http://www.truth-out.org/occupy-colleges-now-students-new-public-intellectuals/1321891418

    Published on Truthout (http://www.truth-out.org)

  75. @ Bruce

    TPTB in Amerika will mow the people down with tanks before ceding power. It will make Syrian oppression look like a picnic. There are already plans in place to brutally clamp down on all the major cities at the first sign of civil unrest. The next time you get into your car, know that you are probably being tracked by Big Brother at every intersection you pass. We are already slaves.

  76. Bruce E. Woych

    @Anonymous: …Not us New Yorkers! (ha…ha…). Reminds me of the good old days!

    check out Thanksgiving day News on the global tipping point:

    http://www.youtube.com/user/TheRealNews#p/u/3/R5Ep5rf14oA

    Global Recession Looms as Euro Crisis Deepens
    From: TheRealNews | Nov 23, 2011 | 803 views
    Costas Lapavitsas: Regulation is not enough, the public must take over the financial system
    View comments, related videos, and more

  77. Bruce E. Woych

    24 November 2011 Last updated at 07:08 ET
    Struggling Hungary knocks on IMF’s door again
    Nick Thorpe By Nick Thorpe BBC News, Budapest
    Poor Hungarians receiving food handouts in Budapest, 22 Nov 11 Some poor Hungarians get food handouts from Krishna volunteers
    Continue reading the main story
    Related Stories

    Hungary asks for IMF assistance
    Hungary country profile
    Hungarian ‘democracy is at risk’

    Hungary is not in the eurozone but it has joined the club of Europe’s debt casualties and it too is seeking IMF help.
    ———————————————————————————————-

    http://www.bbc.co.uk/news/world/europe/

    24 November 2011 Last updated at 19:57 ET
    Reform proposed for EU treaties(L-R) Angela Merkel, Nicolas Sarkozy, Mario Monti
    Italy’s new leader Mario Monti holds a first meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy.
    Hewitt: Agreeing to disagree
    Flanders: Euro ‘end game’
    ———————————————————————————————-

    http://www.bbc.co.uk/news/business-15869945

    24 November 2011 Last updated at 19:03 ET
    Fears of eurozone bank run
    By Laurence Knight Business reporter, BBC News
    The 1929 run on the Millbury savings bank in Massachusetts Western governments used to think that financial panics were a problem of the distant past….

    Global Economy

    What’s the matter with Spain?
    What’s the matter with Italy?
    Is the euro about to capsize?
    How might Greece leave the euro?

    R is for run. As in bank run.

    If you’re wondering what a bank run is, think of Northern Rock. It is a sensitive topic, not least here at the BBC.

    But it is a subject that is being increasingly discussed by investors and economists in the eurozone.

  78. Bruce E. Woych

    http://www.nakedcapitalism.com/2011/11/mark-ames-how-uc-davis-chancellor-linda-katehi-brought-oppression-back-to-greece’s-universities.html

    WEDNESDAY, NOVEMBER 23, 2011
    Mark Ames: How UC Davis Chancellor Linda Katehi Brought Oppression Back To Greece’s Universities
    Yves here. Reader sidelarge raised the issue yesterday in comments, of UC Davis chancellor Linda Katehi’s role in abolition of university asylum in Greece. The story is even uglier than the link he provided suggests.
    By Mark Ames, the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine. Cross posted from The eXiled
    (Introduction excerpt)
    “A friend of mine sent me this link claiming that UC Davis chancellor “Chemical” Linda Katehi, whose crackdown on peaceful university students shocked America, played a role in allowing Greece security forces to raid university campuses for the first time since the junta was overthrown in 1974. (H/T: Crooked Timber) I’ve checked this out with our friend in Athens, reporter Kostas Kallergis (who runs the local blog “When The Crisis Hits The Fan”), and he confirmed it–Linda Katehi really is the worst of all possible chancellors imaginable, the worst for us, and the worst for her native Greece.”

    see what is coming here next: read the article. No more LIES ! The CAT is out of the BAG!

    http://www.nakedcapitalism.com/2011/11/mark-ames-how-uc-davis-chancellor-linda-katehi-brought-oppression-back-to-greece’s-universities.

  79. “It’s coming folks, and I guarantee you this: Whatever your “nightmare” scenario is for such an event, it’s not bearish enough.”

    http://market-ticker.org/akcs-www?post=198023

    “The epicenter for the coming global financial collapse is almost certainly going to be in Europe.”

    http://www.blacklistednews.com/17_Quotes_About_The_Coming_Global_Financial_Collapse_That_Will_Make_Your_Hair_Stand_Up_/16671/0/0/0/Y/M.html

    “Death of a currency as eurogeddon approaches
    It’s time to think what hitherto markets have regarded as unthinkable – that the euro really is on its last legs.”

    http://www.telegraph.co.uk/finance/comment/jeremy-warner/8913884/Death-of-a-currency-as-eurogeddon-approaches.html

  80. “Here’s what a senior trader at a US bank told the Financial Times: We are now seeing funds and clients wanting to get out of anything that is denominated in euros and that includes Bunds because they don’t know what will happen to monetary union.”

    http://www.counterpunch.org/2011/11/25/germanys-failed-bond-auction/

  81. “Prepare for riots in euro collapse, Foreign Office warns
    British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain.”

    http://www.telegraph.co.uk/news/politics/8917077/Prepare-for-riots-in-euro-collapse-Foreign-Office-warns.html

  82. Here is why the Euro [and dollar?] might collapse, or at least weaken.

    http://members.beforeitsnews.com/story/1427/882/Venezuela_Takes_Shipment_of_European_Gold_Holdings..html