Posted on 04/12/2011 6:20:56 AM PDT by SeekAndFind
In the name of saving the euro Europe is undermining it. Former German chancellor Helmut Kohl almost single-handedly created the political environment that brought the euro into existence. It would be a travesty to have another German chancellor, Angela Merkel, unwittingly destroy it.
The debt woes of Portugal, Spain, Ireland and others should in no way threaten the existence of the euro, any more than the state of Illinois' wayward ways should threaten the dollar's existence.
Chancellor Merkel and other EU pooh-bahs are making two fundamental mistakes. One is forcing the European Central Bank (ECB) to be a bailout facility for woebegone countries such as Greece. Loading up the ECB with junk paper is no way to make a new currency trustworthy and viable.
Instead, the EU should recognize that the debts of Portugal et al. need to be restructured. Two-year paper may have to be extended to 20 years and at lower rates of interest.
And here we come to Merkel & Co.'s second big error: Forcing these financially troubled countries to undergo bone-crunching austerity in order to continue financing unsustainable, short-term debt is not politically viable. An electorate will put up with only so much pain before there's a political reaction, one that could lead to what is now unthinkable--Argentinean-like repudiations.
The Germans should be remembering the legacy of their own post-World War II economic savior, Ludwig Erhard. Against the wishes of the Allied occupiers, Erhard in the late 1940s threw off all of West Germany's economic and rationing controls. He brought in a new currency, the deutsche mark, and launched the process of dramatically reducing Germany's crushing wartime tax rates.
(Excerpt) Read more at forbes.com ...
Ping.
Why is Forbes championing the EUSSR?
Why is Forbes championing the EUSSR?
I doubt it is being done "unwittingly".....
Perhaps Forbes sees default/secession of the PIIGS as the beginning of the end of EUrotopia. Thus, the encouragement of German political/economic reality?
yitbos
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