Europe Rehearses Suicide (Exploring Options Or Actually Slicing Aorta?)

[koganbot]

NY Times: European Central Bank Dashes Hopes for Bolder Action

Some people who believe that they know what they're talking about think that the European leaders really have no clue as to what they're doing. (This post adds nothing to my last post on this issue.)

Comments

[koganbot]

Krugman says, "we have Cameron acting as a spoiler to protect the wheeler-dealers, poisoning EU politics." I don't know enough about this to know what Krugman means; I assume Britain was right not to go along with the pact, because the pact is terrible; but Cameron's reasons for not going along seem to be equally terrible — i.e., that he doesn't want British financial institutions to be subject to the regulations; whereas he should have said that the prescribed deficit limits on governments were totally insane; but if he'd known to say that, he'd have to have known that his austerity policy isn't much saner, and he doesn't seem to know it. Of course, I don't know it either; I've merely been told it by people I've decided to believe.

[katstevens.livejournal.com]

The problem is that over here, the Tories are hugely anti about the idea of being in any way accommodating to Europe full stop. So the government is trying to spin this as 'RIGHT HO WE SHOWED THEM FURRINERS EH WHAT' whereas everyone else in the business sector is scratching their heads and going 'er um these guys are our main market and if they become instable because we veto all their agreements then we're fvcked too?'

Thankfully it seems that the rest of Europe is ignoring our veto and carrying on without us. Thank fvck for that.

[koganbot]

But — even though this had nothing to do with Cameron's reasoning — this agreement isn't going to make Europe more stable. It has nothing in it forcing the ECB to buy bonds, which is what needs to happen pretty much immediately. And even if the ECB, despite what it's been saying, does decide to finally, unconditionally, back Italian and Spanish bonds, the agreement forces southern Europe to grow through austerity, and sets an insanely low deficit limit for them and for everyone else, with absolutely no mechanism for the south to actually grow. So, if the bond market stabilizes, either through ECB action or through investors deciding that the agreement has made bonds safe again, then the immediate threat has passed but the not-quite-so-immediate problem is exacerbated, since the south can't get out of its hole. Or so say the macroeconomists I've been reading.