but he considers them pigs
"...Some 90% of the refinancing debt that the commercial banks of the GIPS countries (Greece, Ireland, Portugal, and Spain) hold with their respective national central banks served to purchase a net inflow of goods and assets from other eurozone countries."
" Two-thirds of all refinancing loans within the eurozone were granted within the GIPS countries, despite the fact that these countries account for only 18% of eurozone GDP. "
"Indeed, 88% of these countries’ current-account deficits over the last three years were financed via the extension of credit within the Eurosystem."
"By the end of 2010, ECB loans, which originated primarily from Germany’s Bundesbank, amounted to €340 billion."
" This figure includes ECB credit that financed capital flight from Ireland totaling €130 billion over the past three years."
nasty fact roll eh ???
conclusion:
" The ECB bailout program has enabled the people of the peripheral countries to continue to live beyond their means, and well-heeled asset holders to take their wealth elsewhere."
sinn's loop misses the obvious mobius strip like gambits availible to the ECB :
he prefers to act as if money creation powers do not exist :
"The capacity for continuing this policy will soon be depleted, as the central-bank money flowing from the GIPS countries to the core countries of the eurozone increasingly crowds out the money created through refinancing operations there. If this continues for two more years as it has for the past three, the stock of refinancing loans in Germany will disappear altogether."
" If German banks drop out of the refinancing business, the European Central Bank will lose the direct control over the German economy that it used to have via its interest-rate policy. "
"The main refinancing rate would then only be the rate at which the peripheral EU countries draw ECB money for purchases in the center of Europe, which ultimately would be the source of all the money circulating in the euro area."
the real nexus:
"The GIPS’ enormous current-account deficits"
which along with "...the massive exodus of capital from Ireland "
"... would not have been possible without ECB financing. "
"Without the additional money that GIPS central banks created in excess of their countries’ requirements for internal circulation, trade deficits could not have been sustained, and the GIPS’ commercial banks would have been unable to prop up asset prices "
.
" the longer bailout loans continue, the longer the GIPS’ current-account deficits will persist, and the more their external debts will grow. Eventually, these debts will become unsustainable."
"The sole exception is Ireland, which is suffering not from a lack of competitiveness, but from capital flight. Ireland is the only country that has lowered its prices and wages, and its current-account deficit is about to swing into surplus. By contrast, Spain’s external deficit is still above 4% of GDP, while Portugal and Greece recently recorded astronomical figures of around 10%."
how impossible is produced by chopping away the relevence of the possible :
.
"Apart from China, central banks don’t intervene to protect their currencies anymore. "
"Europe, too, will get a bloody nose if it keeps trying to artificially prop up asset prices in the periphery."
really why ??? by whom ??
" The sums required for this could ultimately run into trillions.... This would shatter Europe."
again really ??
why ???
we are left holding a mere assertion in our mitts
the rectification sinn style ??
"Apart from financial restructuring, which is crucial, Greece and Portugal must become cheaper in order to regain their competitiveness. Estimates for Greece assume that prices and wages need to come down by 20-30%. Things won’t be much different in Portugal."
there you have it the teutonic climax the orgasmic thought
real wage cuts equal to 20-30 % !!!!
hey herr sinn
why not send pigs wages back to the fuckin post war years ???
and this is really delightful
"If these countries lack the political consensus they need to pull this off, they should in their own interest consider leaving the eurozone temporarily to depreciate their currencies. "
but alas reality pulls him back from the rapsody of ravishment
"The banking system would not survive this without help, so the EU’s bailout activities should be refocused accordingly."
yikes the euro harnesss will become a haulter ....the debt structure a gibbet
so how exactly will the pigs "... benefit from a furlough from the eurozone." ???
no way out by staying in either since
"Depreciation inside the eurozone in the form of deflation...
would drive large parts of the real economy into excessive debt "
"only the value of (pigs) assets, not that of bank debts, would decline."
after providing the assurity of misery without any real up side
the sum up:
"It is time to face the fact that Europe’s peripheral countries have to shrink their nominal GDP to regain competitiveness. "
and then the implicit advice to jetison the fuckers now
" The only question is whether they will take the euro down as well."
Hans-Werner Sinn is Professor of Economics and Public Finance, University of Munich, and President of the Ifo Institute
