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Eurozone rescue without growth means Finland could be first to leave
The Telegraph ^ | 7/15/2012 | Roger Bootle

Posted on 07/15/2012 5:58:34 PM PDT by bruinbirdman

Finland is just as financially conservative as Germany and in contemplating euro exit, she does not bear the burden of war guilt.

After last week's euro meeting, Spanish 10-year government bond yields fell back to 6.6pc.

So that's all right then. In fact, if Spain carried on borrowing at this rate it would be set for the knacker's yard sooner than you could say Don Quixote.

The essence of the eurozone's financial problem lies in the discrepancy between northern and southern members. So why don't they just integrate their finances? Because that would mean the northern countries taking their share of the debts incurred by the southerners.

Understandably, people in the north don't like this idea. They haven't enjoyed the benefits of government largesse – why should they now suffer the pain of higher taxes or interest costs to pay for it?

Suppose the German government said: "We are going to borrow more in order to lend it to the Spanish government." The reaction would be the Teutonic equivalent of "Not on your Nellie." So if you are hell-bent on preserving the euro, somehow you have to get money flowing to the south without the north noticing. This is where the wizardry of modern finance comes in.

The solution is that the German government does not lend the money – at least, not directly. The ECB provides one alternative channel through its purchases of peripheral countries' debt.

A second comes through the euro-system's recycling of deposits which have left vulnerable countries' banking systems and built up with the Bundesbank. (This is the so-called Target-money.) A third channel is to put the money through an off-balance sheet entity. The latest version of this idea is called the European Stability Mechanism (ESM). This is partially funded by

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TOPICS: Business/Economy; Crime/Corruption; Foreign Affairs; News/Current Events
KEYWORDS: finland

1 posted on 07/15/2012 5:58:42 PM PDT by bruinbirdman
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To: bruinbirdman

I have a better idea. Let the mediteranean idiots sell off their land to the northerners to pay their debts. Then they can just pay rent and never have to worry about anything.

2 posted on 07/15/2012 6:09:59 PM PDT by mamelukesabre
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To: bruinbirdman

It’s understandable that hard working nations like Finland wouldn’t want to be compelled to bail out members of the Siesta Bloc.

3 posted on 07/15/2012 6:17:56 PM PDT by Gay State Conservative (Jimmy Carter Is No Longer The Worst President Of My Lifetime)
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To: mamelukesabre
I have an idea which will actually happen.
I will watch as the inevitable “Running out of other people's money” collapses Europe back into another of its inevitable, cyclic, genocidal wars.

Until the rise of the biblical Antichrist this cycle will not be broken.

Selling to the Northern economies? Put down the crack pipe.

Collapse the currency and nationalize everything foreign owned? Then fight to the death who ever objects? Why that sounds like... the solution that Europeans have resorted to for thousands of years.

Behold, all things old have become new.

4 posted on 07/15/2012 6:22:14 PM PDT by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: MrEdd

It seems to me hitler cured all europeans of any nationalistic tendencies and forever stigmatized all feelings of pride in one’s nation or creed. It’s every man for himself, internet, rock and roll, and american pop culture from here on out.

5 posted on 07/15/2012 7:30:18 PM PDT by mamelukesabre
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