Greece Teetering on the Edge
With Greece about a hairs' breath from default on its sovereign bonds, and Germany preparing to save its (Germany's) banks and insurance companies, because they are holding Greek sovereign debt, I'm reprinting two Bloomberg pieces quoting various European officials. Read these and tell me if you get the sense that they have any idea what they're doing...
September 9 – Bloomberg (Matthew Brockett and Jeff Black): “Juergen Stark resigned from the European Central Bank’s Executive Board after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting. During the Sept. 4 call, Stark, 63, expressed his strong opposition to the program, which was expanded last month when the ECB started buying Italian and Spanish bonds… Stark was supported by the central banks of Austria and the Netherlands, the person said… Stark’s resignation, less than two months before President Jean-Claude Trichet’s term ends, suggests policy makers are increasingly split over the best way to fight Europe’s debt crisis… ‘There is quite a severe row going on,’ said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. ‘It seems that it went too far.’”
September 6 – Bloomberg (Rainer Buergin and Tony Czuczka): “German Finance Minister Wolfgang Schaeuble called on euro-area governments to fully implement curbs on debt, saying that only fiscal ‘solidity’ will help tame financial-market turmoil. Schaeuble’s comments to lawmakers in Berlin today seek to raise the pressure on euro-area states to follow Germany and clamp down on debt to tackle the core cause of the sovereign crisis that is rocking markets worldwide. Financial markets are in ‘a state of anxiety,’ requiring ‘a new mentality’ rather than short-term stimulus, he said. ‘Markets are not the problem, excesses are,’ Schaeuble said… The constitutionally mandated debt ceiling enacted by Germany and now being emulated by France and Spain is ‘of fundamental importance,’ he said. Only ‘financial-policy solidity will win the confidence of markets.’”
My own view here is that neither they nor most of our central bank and government officials really have any idea what they're doing. I think we may be seeing an "unraveling" that's quickly getting away from them.
September 9 – Bloomberg (Matthew Brockett and Jeff Black): “Juergen Stark resigned from the European Central Bank’s Executive Board after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting. During the Sept. 4 call, Stark, 63, expressed his strong opposition to the program, which was expanded last month when the ECB started buying Italian and Spanish bonds… Stark was supported by the central banks of Austria and the Netherlands, the person said… Stark’s resignation, less than two months before President Jean-Claude Trichet’s term ends, suggests policy makers are increasingly split over the best way to fight Europe’s debt crisis… ‘There is quite a severe row going on,’ said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. ‘It seems that it went too far.’”
September 6 – Bloomberg (Rainer Buergin and Tony Czuczka): “German Finance Minister Wolfgang Schaeuble called on euro-area governments to fully implement curbs on debt, saying that only fiscal ‘solidity’ will help tame financial-market turmoil. Schaeuble’s comments to lawmakers in Berlin today seek to raise the pressure on euro-area states to follow Germany and clamp down on debt to tackle the core cause of the sovereign crisis that is rocking markets worldwide. Financial markets are in ‘a state of anxiety,’ requiring ‘a new mentality’ rather than short-term stimulus, he said. ‘Markets are not the problem, excesses are,’ Schaeuble said… The constitutionally mandated debt ceiling enacted by Germany and now being emulated by France and Spain is ‘of fundamental importance,’ he said. Only ‘financial-policy solidity will win the confidence of markets.’”
My own view here is that neither they nor most of our central bank and government officials really have any idea what they're doing. I think we may be seeing an "unraveling" that's quickly getting away from them.
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