<i>
'..They haven't even correctly diagnosed the problem yet, so how can there be effective reform?
It may be 'crucial to break the vicious cycle between banks and sovereigns', but unfortunately it is </i>impossible<i> – unless defaults are allowed to happen .. Greece which currently boasts of a 132% debt-to-GDP ratio – which by the way represents a huge 33% decrease from last quarter.'</i><blockquote>'In fact, we suspect that if not for Germany's and the Bundesbank's reluctance, the ECB would have thrown its rulebook out of the window long ago. This reminds us that German economist Hans-Werner Sinn recently penned a well-reasoned jeremiad against the bailout policy, which was signed by 180 other German economists. This resulted in a media campaign against Sinn, who is now basically
denounced as the euro's grave digger. One must also not forget, the EU and the euro area both are a Nirvana for interventionist macro-economists. Their services are in great demand and one must assume that they get paid well above their market value. It is no wonder that a number of them are manning the barricades in favor of the bailout policy. However, the deteriorating social mood across Europe will likely put paid to all these policies in the end, no matter how vigorously they are defended by the statist elites.
..
There it is again: the political elites are committed to the euro, and therefore, it allegedly cannot fail. As to what the 'leaders of the euro-zone have clearly understood now', that can only have been meant as a joke to enliven his speech a bit. Not only remains reform 'piecemeal', it isn't the right kind of reform anyway. They haven't even correctly diagnosed the problem yet, so how can there be effective reform?
It may be 'crucial to break the vicious cycle between banks and sovereigns', but unfortunately it is
impossible – unless defaults are allowed to happen. The banks have been told by regulators for years that sovereign debt holdings didn't require any capital to be set against them, as they are supposedly 'risk free'. The outstanding mountains of debt by the likes of Italy (nearly €2 trillion) won't go away – someone is always holding the debt, and as far as we are aware, European banks e.g. hold some €1.2 trillion of Italy's debt. There is no conceivable scenario in which the interdependence between banks and sovereigns in the fiat money system can possibly be disentangled. Moreover, many euro area banks also hold large amounts of European shares – which are collapsing in value as well.
..
What 'Austerity'? Euro Area Government Debts Keep RisingEuro-Stat reported yesterday that the euro area-wide public debt-to-GDP ratio has reached a new high of 88.2% of GDP. Always keep in mind that the 'Growth and Stability Pact' imposes a 60% limit and that there are outliers like Estonia which sports only a 6% of debt-to-GDP ratio and Greece which currently boasts of a 132% debt-to-GDP ratio – which by the way represents a huge 33%
decrease from last quarter.
..
Debt-to-GDP ratios increased in 21 of the 27 EU nations over the last quarter and declined in just six of them. Apparently the need to tighten belts is not really taken very seriously just yet, with the exception of the nations already under the bailout umbrella (and even among those only Greece managed to actually lower its debt-to-GDP ratio). The six outliers were Denmark, Germany, Estonia (so the country with the by far lowest debt-to-GDP ratio lowered it even further), Sweden, Hungary, and Greece.'
- Acting Man, (
Source, July 24, 2012)</blockquote>
Context<blockquote>
'..fiat inflation is a powerhouse of social, economic, cultural, and spiritual destruction.' - Jörg Guido Hülsmann
Government['s] .. privilege [of] .. fractional reserve banking .. a fraudulent business practice.''..stop fractional reserve lending and other fraudulent lending practices.''..inflation cannot be considered as a way of life and that it is imperative to return to sound monetary policies.'(Full Reserve Banking) - '..tackling deficits.' - '..work rule reforms and pension reforms, not higher taxes..''..a financial system of the bankers, by the bankers, and for the bankers—consumers and shareholders be damned.' - Hamel</blockquote>