Posted on 11/09/2011 3:27:31 PM PST by blam
DELONG: It Is 1931. We Are Austria. If The Fed Doesn't Save Us Here Comes Another Great Depression...
Henry Blodget
Nov. 9, 2011, 5:21 PM
How does Berkeley professor Brad Delong feel about what's going on in Europe?
He's freaking out:
Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis
I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria--that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II.
Well, right now guess what?
The time is 1931, and we are Austria.
The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip. The Federal Reserve Needs to do so now.
Professor Delong cites professor Paul Krugman, who is also freaking out:
This is the way the euro ends.
Not with a bang but with bunga-bunga.
Seriously, with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights. And as Martin Wolf says today, the unthinkable — a euro breakup — has become all too thinkable:
A eurozone built on one-sided deflationary adjustment will fail. That seems certain. If the leaders of the eurozone insist on that policy, they will have to accept the result.
Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in today’s Times
(snip)
(Excerpt) Read more at businessinsider.com ...
Just say " 'Ello, Mate!" a lot.
Wow. It looks like it may hit the fan tomorrow when Italy tries to sell new bonds.
You’ve got to worry about what the Fed will do when Goldman Sachs and Morgan Stanley give them their new orders with unprecedented desperation.
On the brighter side, maybe a new Cain accuser will come forward and all this silly little financial stuff will just be pushed to the background.
And put another shrimp on the barbie ...
klaus barbie, if you got one.
Some people here need new eyeglasses.
Austrian — ie, “Sound of Music”, Hapsburg, Vienna, Mozart, etc.
Australian — Shrimp on the Barbie, Sidney Opera House, Fosters, Men at Work, etc.
The post says “Austria, 1931” which is a reference to a belief that a run on the banks in 1931 in Austria took the the world into Great Depression. Kinda like we think it started with the 1929 Stock Market crash.
LLS
“with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear”
Yes and no.
If Italy was using their own currency, they’d be well on their way to a run on their central bank. They don’t though.
When (not if) America gets to that point, we’ll have a run on our currency. No one can back us up.
“nuff said.
If the fed does act I guaintee we will be in a very long depression!
If they stay out of it, it will be a much shorter depression.
They have created a situation for themselves for which there is no solution.
[insert spine tingling organ music]
What will John Quiggin say??? Tune in tomorrow, for.......As The EuroZone Burns!
(gotta love a post that ends with that sort of cliff hanger)
I am almost certain they did it on purpose
BUMP
...and some people need a better sense of the absurd.
I don’t know if this is the beginning of the end,but if they can’t do something to arrest investor fears then things are going to get out of control very quickly.I think that the next two weeks will be critical.
throwing money at it is not helpful
That would just further weaken this country,which may be the plan.
Nothing the Fed does affects only taxpayers. The Fed exists for one reason -- and one reason, only. To print money.
The Fed will relieve banks of the risks they took, but the burden won't fall only on taxpayers. It will fall on anyone who holds dollars. Inflation, it's the real flat tax.
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