Once upon a time there was a small, heavily indebted state. But because money was flowing everywhere as unstoppable global tide (produced foolish banks in Wall Street, the City, in Northern Europe), borrowing costs were zero everywhere so nobody paid attention.
Suddenly, in the autumn of 2008, the tide gave way to low tide. With the ebb to "dry" the banking sector cash, slowly came the ... stagnation in the real economy. Inevitably, the national income of the small, heavily indebted state began to decline while the growth rate of debt (the interest rate) grew (by the grace of international liquidity that pushed interest rates up). Eventually, nobody loaned this small state to serve (ie epanakylyei) the debt in 2008 amounted to € 260 billion.
Somewhere there arrived a good troika to help not bankrupt the small state. For two years pay to avert bankruptcy. Initially gave € 110 billion putting some terms in the small state as it is logical to make each lender. Half years after he promised other € 130 billion. And, as if that were not enough, he added the "gifts" they bring and a "haircut" previous debts of around (allegedly) of € 100 billion.
Anyone who knows nothing other than the above (correct) data should be concluded that this lady troika is merciful and generous: Overall gave € 240 billion from the "pocket" and acted like the old lenders small state to "extinguish", delete that, other € 100 billion. That is, countess € 340 billion as gifts in the small, heavily indebted state.
Let us accept this. Suppose that lady troika is indeed merciful and generous. That means that it is hopelessly stupid. I know it's heavy word but, alas dear friends, how can we come up with different designations (from the Troika deserves the Nobel Vlakias) where, in order to fight a debt of around € 260 billion, € 298 billion fuck in 2010, spent € 340 billion, but the small, heavily indebted state, although this goldmine of money main troika came again to owe more than € 345 billion!
I'll say it once again to capture it and the same: A small nation eurozone two years ago had an unsustainable debt of about € 300 billion. The troika offered in this small state, with one or another way, € 340 billion to help. And we got today? Arrived our little state to owe € 340 billion and counting. But if the 2010 Ms. Merkel and Mr. Strauss-Kahn (remember this truth ;) had told Papandreou "George, our child, please do not run away, we will repay the entire Greek public debt today," would save € 40 billion and Greece will not chrostage penny!
Defending course of themselves (ie monumental obtuseness of them) would say that they are not to blame but the Greek State did what they promised. Rectum but off topic. It may, indeed, be no doubt that the Greek state has failed to do in two years, as promised, all reforms lingering for decades. It is, however, not true that the Greek government lowered the primary deficit of the last two years (with misanthropic cuts, of course-of course, the income of the weakest) by about 9%?, Or not true that such reduction does not been done anywhere, ever, in peacetime and in times of recession, the economic history of mankind? On both questions the answer is absolutely positive.
So the unworthy though is the Greek government (surely is) the truth remains relentless troika: were received in May 2010 a debt of less than € 300 billion, they put the Greek government to shake violently in his girdle, they found € 340 billion for the Greek government and came despite the sacrifices of the Greek compact and other European taxpayers, increase (!) in Greek government debt by € 40 billion. And as if that was not enough, at the same time managed to shrink (as warned them that they do), the national income, from which you will have to repay the debt by 15%. Well done troika!
And now?
Now realized, too late, of course, top the stupidity. Got a problem which could have been settled with an amount of € 40 or € 50 billion (ie an interest-free loan in January 2010) and turned it into a black hole of a trillion and counting - if we take into "account our understandings of pesousis Ireland and Portugal, the hidden understandings of stagnant Italo-Spain, and so on.
Now understood that something similar succeeded to both good, but almost as weak, pupils in the class: Portugal and Ireland, wherever there, despite the enthusiastic flagellation of these peoples, the figures are equally damning for lady Troika. As for tinIspania and Italy, and these are exactly the same path. Only when their own multiple debt, and their own national income into the stage light-headed which are the smallest of the bankrupt member states, it will be too late for the eurozone. It has come to the end of the road and Germany will have to create a new monetary union east of the Rhine and north of the Alps - at the cost of loss of Asian markets and a tripling of the German unemployment.
Faced with this realization, has broken an old war between essentially Frankfurt and Berlin. On the one hand we have the financial sector, to Frankfurt, where there is almost unanimous: Loans of Greece will normally repaid over the next two months, until the end (hopefully "hopefully"), the French presidential elections. Following Greece and Portugal will "amputate" and "cauterized" which did not extend to the rest of the eurozone gangrene. On the other we have the Chancellery where there is a unique cacophony: Some agree with Frankfurt, others insist that the only "solution" is the withdrawal of Germany from the euro (and, in particular, monetary secession from France), some third persist that the eurozone should be kept as it is but bankrupt countries be strengthened substantially.
Faced with the option of this cacophony, Ms. Merkel tends conservative Being in favor of the status quo. That is, the continuation of the current nonsense where states like ours receive hundreds of billion so the debt grows ... and national income to decline. Not that the German Chancellor did not understand that the current path leads to the precipitation of the whole eurozone. The ambivalence of the German leadership simply reflects the fact that on the one hand they feel they lack the political support to deal rationally Crisis (since that requires a permanent commitment of Germany with the euro area), while the other disagreed (and rightly so) with the solution Frankfurt - what I call the amputation-cautery.
The solution of Frankfurt
A few days ago I was in Frankfurt turning a documentary on the English Channel 4. As part of the filming I had the opportunity to talk with three bankers with the President of the Stock Exchange and director of a domestic shadow bank. Although I met them separately, the consensus among them was impressive. Briefly, consider that (as I wrote above), after the French elections, Greece and Portugal will lead them to the exit from the eurozone. Why? Because it admitted Germany was wrong. Because therapy for the past two years proved toxic (as above documents). Admit in other words folly memoranda not only in Greece and the rest. They consider Memoranda kill Greece or Portugal.
Converted them to members whose gangrene caused by wrong treatment can no longer be healed and that we need: (a) to stop the poisonous treatment (ie tight rigor) to the other members who have not yet reached the stage of gangrene (Italy Spain and with little effort, Ireland), and (b) cauterized the wound that will leave amputations of Greece and Portugal (namely, our departed from the euro.) And how cauterized? By providing nearly € 2 trillion of fresh money from the ECB to the banks of the remaining members (notably Italy and Spain) and while deleting much of the debt of Greece and Portugal, while sustaining some of our banks, so the two countries under amputation do not collapse completely.
Error miserably
The solution of Frankfurt, although it has not prevailed, gaining ground daily in Germany. This partly explains some of the sayings of Mr. Schauble and overall dystocia noted with regard to the Memorandum 2. (Another reason is that, before the revelation of jewelry policy towards the Greek debt, the German leadership earns some points appearing not to want to throw and other twice in this black hole.) Nobody knows if eventually prevail whether the conservatism of Merkel or will prevail soon the excitement of Frankfurt for the solution of amputation-cautery. In Arades that follow, and which close, allow me to quote six reasons why optimism Frankfurt (namely that it is possible to rescue the eurozone's ouster two or more countries) based on error miserably.
Frankfurt assumes it knows what is by definition unknown, at least before the disaster: the cost of an amputation. The interfaces of the banking systems of Greece, France and Germany, and Portugal and Spain, will be seen in daylight only after the disaster - just as interfaces to the relatively short Lehman's international banking system was impossible to look only after the collapse.
The massive supply of freshly money on eurozone banks (after a crippling Greece and Portugal) will act as a colossal cortisone injection in cancer patients: although it would relieve for some time but in the meantime, the cancer will do the job at " internal ', growing, becoming more vicious and ultimately, more lethal. Briefly, as Japanese banks during the 1990s, assisted by rivers liquidity hid the iniquities accelerating stagnation of the real economy, something similar will happen in countries like France, Italy, Belgium, Spain.
So when I break out from the ranks of those same banks, a new wave of crisis, then amputation of Greece and Portugal will get and harrow Italy, Spain, the last and best of France. All these trillion will have been spent to save the Franco-German axis will have gone down the drain. And the worst? Would have lost at least three years of economic growth. Enough to stay in Europe permanently behind the ecumenical developments.
The losses of taxpayers in surplus countries from bankruptcy in Greece and Portugal, will increase the contrast of the peoples of Germany, Holland etc to new rescues Member States can not be saved only through the provision of liquidity to banks. While it will take more money for new loans, northerners Taxpayers will need to guarantee they will refuse stubbornly.
Foreign investment (eg China, Russia, the U.S. firms) in the eurozone will dry before the hideous spectacle of mutilation-cautery and uncertainty that would cause for what lies ahead.
In an interconnected world, the solution of Frankfurt will sow uncertainty in every corner of the earth, and thus invigorate the winds of recession, as the earth is round, will return to the continent fiercely growing recession in both countries North and South, making the attempt to salvage what remained of the mighty eurozone impossible.
The sixth reason is structural. The problem of the eurozone is not Greece, which, as we have seen, would have avoided two years global headlines with a softer approach. The problem of the eurozone is the lack of a unified pan-European regulatory framework for banks, the unmet need for a monetary union to a degree of consolidation of public debt and, finally, the absence of a truly pan-European investment policy to shift their savings (which roam around the world as an unjust curse) to productive (and profitable) investments in areas and sectors most need (from Greece to East Germany).
No part of this trilogy structural problems will not be solved by the method of mutilation-cautery. None. Operas, being interpreted, if the view prevailed Frankfurt, very soon the same collapsing reappear in what is left of the eurozone.
Epilogue
Everyone, except some of our policies have understood the folly top we came in the form of loan contracts (which became known as Memoranda medium etc). Proved poisonous for the entire eurozone. Even in Frankfurt and Berlin understood that, if continued this policy will sink themselves. Until there agree (for this and awake Mr. Monti is not afraid to proclaim, even in front of German leaders, "Enough austerity!).
But somehow, there begins the controversy that tends to take the form of a fight: While Frankfurt acquired recently optimism that it may not change anything just throwing Greece and Portugal than euro, Berlin hesitates. This is good. But not enough: The reluctance of Berlin means continuing poisonous 'treatment' memoranda, the closer you come to our countries in real gangrene and the more we approach the time that Frankfurt will prevail, resulting in disaster for everyone: North and South, East and West (and not only thinking in Europe).
And we? Voting every folly that give us, from May 2010 until now, let's view the Frankfurt gaining ground, coming increasingly closer to the time of amputation-cautery us. If instead we had a leadership with the courage to say no to new loans before the prevalence of Frankfurt, while specifically stating that the position of Greece in the euro zone is non-negotiable, then we gave in Berlin (which will not leave as remains contrary to the view of Frankfurt proceed amputation) one last chance to save the eurozone from the double threat (s) in the boxes Memorandums and (b) the absurd logic of Frankfurt.
Suddenly, in the autumn of 2008, the tide gave way to low tide. With the ebb to "dry" the banking sector cash, slowly came the ... stagnation in the real economy. Inevitably, the national income of the small, heavily indebted state began to decline while the growth rate of debt (the interest rate) grew (by the grace of international liquidity that pushed interest rates up). Eventually, nobody loaned this small state to serve (ie epanakylyei) the debt in 2008 amounted to € 260 billion.
Somewhere there arrived a good troika to help not bankrupt the small state. For two years pay to avert bankruptcy. Initially gave € 110 billion putting some terms in the small state as it is logical to make each lender. Half years after he promised other € 130 billion. And, as if that were not enough, he added the "gifts" they bring and a "haircut" previous debts of around (allegedly) of € 100 billion.
Anyone who knows nothing other than the above (correct) data should be concluded that this lady troika is merciful and generous: Overall gave € 240 billion from the "pocket" and acted like the old lenders small state to "extinguish", delete that, other € 100 billion. That is, countess € 340 billion as gifts in the small, heavily indebted state.
Let us accept this. Suppose that lady troika is indeed merciful and generous. That means that it is hopelessly stupid. I know it's heavy word but, alas dear friends, how can we come up with different designations (from the Troika deserves the Nobel Vlakias) where, in order to fight a debt of around € 260 billion, € 298 billion fuck in 2010, spent € 340 billion, but the small, heavily indebted state, although this goldmine of money main troika came again to owe more than € 345 billion!
I'll say it once again to capture it and the same: A small nation eurozone two years ago had an unsustainable debt of about € 300 billion. The troika offered in this small state, with one or another way, € 340 billion to help. And we got today? Arrived our little state to owe € 340 billion and counting. But if the 2010 Ms. Merkel and Mr. Strauss-Kahn (remember this truth ;) had told Papandreou "George, our child, please do not run away, we will repay the entire Greek public debt today," would save € 40 billion and Greece will not chrostage penny!
Defending course of themselves (ie monumental obtuseness of them) would say that they are not to blame but the Greek State did what they promised. Rectum but off topic. It may, indeed, be no doubt that the Greek state has failed to do in two years, as promised, all reforms lingering for decades. It is, however, not true that the Greek government lowered the primary deficit of the last two years (with misanthropic cuts, of course-of course, the income of the weakest) by about 9%?, Or not true that such reduction does not been done anywhere, ever, in peacetime and in times of recession, the economic history of mankind? On both questions the answer is absolutely positive.
So the unworthy though is the Greek government (surely is) the truth remains relentless troika: were received in May 2010 a debt of less than € 300 billion, they put the Greek government to shake violently in his girdle, they found € 340 billion for the Greek government and came despite the sacrifices of the Greek compact and other European taxpayers, increase (!) in Greek government debt by € 40 billion. And as if that was not enough, at the same time managed to shrink (as warned them that they do), the national income, from which you will have to repay the debt by 15%. Well done troika!
And now?
Now realized, too late, of course, top the stupidity. Got a problem which could have been settled with an amount of € 40 or € 50 billion (ie an interest-free loan in January 2010) and turned it into a black hole of a trillion and counting - if we take into "account our understandings of pesousis Ireland and Portugal, the hidden understandings of stagnant Italo-Spain, and so on.
Now understood that something similar succeeded to both good, but almost as weak, pupils in the class: Portugal and Ireland, wherever there, despite the enthusiastic flagellation of these peoples, the figures are equally damning for lady Troika. As for tinIspania and Italy, and these are exactly the same path. Only when their own multiple debt, and their own national income into the stage light-headed which are the smallest of the bankrupt member states, it will be too late for the eurozone. It has come to the end of the road and Germany will have to create a new monetary union east of the Rhine and north of the Alps - at the cost of loss of Asian markets and a tripling of the German unemployment.
Faced with this realization, has broken an old war between essentially Frankfurt and Berlin. On the one hand we have the financial sector, to Frankfurt, where there is almost unanimous: Loans of Greece will normally repaid over the next two months, until the end (hopefully "hopefully"), the French presidential elections. Following Greece and Portugal will "amputate" and "cauterized" which did not extend to the rest of the eurozone gangrene. On the other we have the Chancellery where there is a unique cacophony: Some agree with Frankfurt, others insist that the only "solution" is the withdrawal of Germany from the euro (and, in particular, monetary secession from France), some third persist that the eurozone should be kept as it is but bankrupt countries be strengthened substantially.
Faced with the option of this cacophony, Ms. Merkel tends conservative Being in favor of the status quo. That is, the continuation of the current nonsense where states like ours receive hundreds of billion so the debt grows ... and national income to decline. Not that the German Chancellor did not understand that the current path leads to the precipitation of the whole eurozone. The ambivalence of the German leadership simply reflects the fact that on the one hand they feel they lack the political support to deal rationally Crisis (since that requires a permanent commitment of Germany with the euro area), while the other disagreed (and rightly so) with the solution Frankfurt - what I call the amputation-cautery.
The solution of Frankfurt
A few days ago I was in Frankfurt turning a documentary on the English Channel 4. As part of the filming I had the opportunity to talk with three bankers with the President of the Stock Exchange and director of a domestic shadow bank. Although I met them separately, the consensus among them was impressive. Briefly, consider that (as I wrote above), after the French elections, Greece and Portugal will lead them to the exit from the eurozone. Why? Because it admitted Germany was wrong. Because therapy for the past two years proved toxic (as above documents). Admit in other words folly memoranda not only in Greece and the rest. They consider Memoranda kill Greece or Portugal.
Converted them to members whose gangrene caused by wrong treatment can no longer be healed and that we need: (a) to stop the poisonous treatment (ie tight rigor) to the other members who have not yet reached the stage of gangrene (Italy Spain and with little effort, Ireland), and (b) cauterized the wound that will leave amputations of Greece and Portugal (namely, our departed from the euro.) And how cauterized? By providing nearly € 2 trillion of fresh money from the ECB to the banks of the remaining members (notably Italy and Spain) and while deleting much of the debt of Greece and Portugal, while sustaining some of our banks, so the two countries under amputation do not collapse completely.
Error miserably
The solution of Frankfurt, although it has not prevailed, gaining ground daily in Germany. This partly explains some of the sayings of Mr. Schauble and overall dystocia noted with regard to the Memorandum 2. (Another reason is that, before the revelation of jewelry policy towards the Greek debt, the German leadership earns some points appearing not to want to throw and other twice in this black hole.) Nobody knows if eventually prevail whether the conservatism of Merkel or will prevail soon the excitement of Frankfurt for the solution of amputation-cautery. In Arades that follow, and which close, allow me to quote six reasons why optimism Frankfurt (namely that it is possible to rescue the eurozone's ouster two or more countries) based on error miserably.
Frankfurt assumes it knows what is by definition unknown, at least before the disaster: the cost of an amputation. The interfaces of the banking systems of Greece, France and Germany, and Portugal and Spain, will be seen in daylight only after the disaster - just as interfaces to the relatively short Lehman's international banking system was impossible to look only after the collapse.
The massive supply of freshly money on eurozone banks (after a crippling Greece and Portugal) will act as a colossal cortisone injection in cancer patients: although it would relieve for some time but in the meantime, the cancer will do the job at " internal ', growing, becoming more vicious and ultimately, more lethal. Briefly, as Japanese banks during the 1990s, assisted by rivers liquidity hid the iniquities accelerating stagnation of the real economy, something similar will happen in countries like France, Italy, Belgium, Spain.
So when I break out from the ranks of those same banks, a new wave of crisis, then amputation of Greece and Portugal will get and harrow Italy, Spain, the last and best of France. All these trillion will have been spent to save the Franco-German axis will have gone down the drain. And the worst? Would have lost at least three years of economic growth. Enough to stay in Europe permanently behind the ecumenical developments.
The losses of taxpayers in surplus countries from bankruptcy in Greece and Portugal, will increase the contrast of the peoples of Germany, Holland etc to new rescues Member States can not be saved only through the provision of liquidity to banks. While it will take more money for new loans, northerners Taxpayers will need to guarantee they will refuse stubbornly.
Foreign investment (eg China, Russia, the U.S. firms) in the eurozone will dry before the hideous spectacle of mutilation-cautery and uncertainty that would cause for what lies ahead.
In an interconnected world, the solution of Frankfurt will sow uncertainty in every corner of the earth, and thus invigorate the winds of recession, as the earth is round, will return to the continent fiercely growing recession in both countries North and South, making the attempt to salvage what remained of the mighty eurozone impossible.
The sixth reason is structural. The problem of the eurozone is not Greece, which, as we have seen, would have avoided two years global headlines with a softer approach. The problem of the eurozone is the lack of a unified pan-European regulatory framework for banks, the unmet need for a monetary union to a degree of consolidation of public debt and, finally, the absence of a truly pan-European investment policy to shift their savings (which roam around the world as an unjust curse) to productive (and profitable) investments in areas and sectors most need (from Greece to East Germany).
No part of this trilogy structural problems will not be solved by the method of mutilation-cautery. None. Operas, being interpreted, if the view prevailed Frankfurt, very soon the same collapsing reappear in what is left of the eurozone.
Epilogue
Everyone, except some of our policies have understood the folly top we came in the form of loan contracts (which became known as Memoranda medium etc). Proved poisonous for the entire eurozone. Even in Frankfurt and Berlin understood that, if continued this policy will sink themselves. Until there agree (for this and awake Mr. Monti is not afraid to proclaim, even in front of German leaders, "Enough austerity!).
But somehow, there begins the controversy that tends to take the form of a fight: While Frankfurt acquired recently optimism that it may not change anything just throwing Greece and Portugal than euro, Berlin hesitates. This is good. But not enough: The reluctance of Berlin means continuing poisonous 'treatment' memoranda, the closer you come to our countries in real gangrene and the more we approach the time that Frankfurt will prevail, resulting in disaster for everyone: North and South, East and West (and not only thinking in Europe).
And we? Voting every folly that give us, from May 2010 until now, let's view the Frankfurt gaining ground, coming increasingly closer to the time of amputation-cautery us. If instead we had a leadership with the courage to say no to new loans before the prevalence of Frankfurt, while specifically stating that the position of Greece in the euro zone is non-negotiable, then we gave in Berlin (which will not leave as remains contrary to the view of Frankfurt proceed amputation) one last chance to save the eurozone from the double threat (s) in the boxes Memorandums and (b) the absurd logic of Frankfurt.
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