"The crucial step is to announce that the central bank will stand behind the sovereign debt of euro zone members, if necessary at the expense of the 2 percent inflation target. This would give governments the financial resources they needed to recapitalize banks. Since the crisis is largely one of confidence, it is likely that bond markets would stabilize without the need for large-scale bond purchases, once there was a credible commitment to intervene where necessary"
why not now ?? since
"you need the ECB to stand between us and the abyss so that we stop staring into it" as mr fatas puts it
but hey quiggin again:
"Unlike any previous central bank in history, the bank has disclaimed any responsibility for the European financial system it effectively controls, or even for the viability of the euro as a currency. Instead, it has focused almost entirely on the formal objective of keeping inflation rates to a 2 percent target"
but surely that is pure mask eh ??
nothing about inflation really scares these brutes like a disorderly default run might
there must be a zone wide fiscal spending reduction
the fiscal squeeze is still on
because the squeeze is still on till the global system looks to be back in reasonable balance
how can the ecb let ... what ?....17 national fiscal policies
all out of the dog house ...all at once b4 balance is restored
and if it can't let em all out
how can it make obvious exceptions??
the pain must continue everywhere
yes unevenly for sure
but the pub sec spending grinding must continue
the public spending sink ever lower
and far fom exceptions
punitive examples must to be made
the theatre of cruelty and indignation proceed
must move forward from curtain to curtain
anward toward o act n plus 1
the zone like norte amigo
is under a yellow flag after all
the global system is slowly and carefully rebalancing north south trade
carefully ??
yes
ie without damaging the forex arbitrage structure
rapid expansionary policy with its concommident import surge
is a violation of track rules under a yellow flag
so is all this eurogeddon shit theatre ?
ultimately ...prolly yes
but when will the intervention come ???
when will the ecb just start buying up the piigs sovereign euro bonds
and hold em
not force em on the various banks
set rate targets for each nations bonds ???
yikes
such a demonstration of power might ...
hey if the ecb intervenes at half past midnight is that too late ????
for that matter
is there a too late zone for the zone anywhere out there anyway ???
"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."
one thinks of a germany let loose to close its intra zonal trading gap
...
not really impossible that eh ??
nor is a burst of prussian style price level lifting to get it done unthinkable either
recall rates during unification
1991 plus 4 %
1992 plus 5 %
1993 nearly 4 and a half %
not really inspiring
we'd need perhaps 3 92's and 4 94's
a real nice poser for the ideological home of the social market concept
i suspect we'd get more like 2 93's and 1 94
now the nixon exported inflation of the 70's to early 80's
pre plaza accords
is more like it
lots of plus 5's and a couple above or near 7
a deacde like that while the piggs ran at 2% oughta cure the intra zone imbalance
the piigs debt over hang
well that would require lifting the whole roject up another 4 % i should think
while supressing the real rate well below zero
sound like your conception of central banking ???
necessity is the mother of habit breaking eh ???
that dire sounding quote is from mr forboding himself wolfie wolf ewolf of the brit crying wollfs by the way
and if " fail " the zone might
then "one sided deflationary pressure"
will end too
but in the interum rebalancing continues
and as for the euro zone
it will coninue one way or other
that is if the trans nats can control the action at the national level sufficiently
isn't it all just too nice for them to wreck it over a little inflation taboo ????
