Posted on 04/22/2012 11:02:11 PM PDT by bruinbirdman
China, Japan, America, the oil powers, and the rising economies of Latin America had a chance to pull Europe back from suicide through IMF pressure, but the world dropped the ball.
Another vast pledge to save the euro, another chance lost to break the hold of Europe’s austerity mystics and force a shift in strategic direction.
“We’re north of a trillion dollars,” said Christine Lagarde, the International Monetary Fund’s queen bee. Kudos to her for netting such sums in her Louis Vuitton handbag but what exactly does this achieve, given that Europe remains bent on committing “economic suicide” -- in the words of Nobel laureate Paul Krugman?
Big language from world officialdom had traction in the early phases of this saga, when episodic spasms of angst caused “sudden stops” in capital to the South – each quickly reversed by bazookas, firewalls, and solemn incantations.
Europe has by now progressed to the tertiary phase of its currency disease. A large chunk of global funding for EMU deficit states has been cut off indefinitely. There has been an almost irreversible collapse of investor confidence in the policy mix and governing machinery of monetary union. It is “permanent stop”. Firewall can do nothing for this.
The IMF’s trillion talk merely encourages EMU and German elites to persist in their belief/dogma that the essence of this crisis is a speculative attack on the euro, and that defensive firepower on a crushing scale is therefore the solution.
Such thinking allows Berlin in particular to continue evading the uncomfortable truth that this mess is home-grown, stemming from massive trade and capital imbalances between North and South, compounded by the world’s most leveraged banking system with loan-to-deposit ratios of 1.3 – the same as Japan at top of Nikkei bubble. (America is a sober
(Excerpt) Read more at telegraph.co.uk ...
Bad link?
-——a speculative attack on the euro-——
To disavow the effect of speculation and to attempt to place single blame is likely a poor policy choice. The search for homogeneous simplicity of blame is to misunderstand the complexity of the problem.
Time and inflation along with acceptable austerity are the path that will be followed.
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