This is an idea how just unlikely the European situation is to resolve reasonably.
According to Bloomberg, Anibal Cavaco Silva – the President of Portugal – in trouble but one of the tiny members of the EU – wants the European Central Bank (roughly the Federal Reserve of Europe – and you could at this point replace ECB with “Germany”) – as the “lendor of last resort” to go into the secondary bond market and buy up “unlimited amounts” of bad debt to prevent speculators from driving down the price of the worthless debt. This was roughly the same argument that the reason Lehman Brothers was failing was because of short selling, rather than people realizing Lehman had huge worthless investments and was insolvent and were dumping their stock and nobody was buying.
Being the “lender of last resort” really would mean the ECB might lend money to a country or its banks for a few days to prevent them from imminent failure and keep them able to pay their bills. Trying to control the values of bonds in the secondary market by buying up unlimited amounts of bad debt is a huge moral hazard – as Portugal would just keep selling more bad debt and not address the systemtic problems in their economy. Who do they think they are – the United States?
I haven’t double checked this, but I remember hearing when this thing started that the countries in the EU that got in trouble the fastest with massive debts were the ones who actually tried to comply with the Kyoto treatyto limit Co2 emissions – shutting down all their “dirty” industry” and spending massive amounts on “green” infrastructure public works projects like solar power farms. Who do they think they are, the United States?
China is declaring victory publicly now. I wonder if Al Gore knows he was the cause for World War Three?
well Al-Gore did invent the internet : )
And yet every day the media touts the “solution of the day” and acts as if they have no knowledge of the underlying problems. It’s as if a family with a $2000 mortgage and $50,000 in credit card debt and a $1500 income cut back to basic cable and acted as if this would solve the problem. There are only bad options available at this point, and the longer they wait, the worse the final outcome will be.
Greece is now buying oil from Iran (according to Reuters) since nobody else will extend them credit. Nothing could go wrong with that!
Where in Zuccotti Park is the Portuguese ambassador’s tarp-tent, I wonder?
It may not be obvious yet, but the essence of what has happened is the European Central Bank just repossesed Italy and Greece, forcing the countries to install leaders not elected by the people under the threat of pulling the plug on the country’s finances.
“Technocrat” is the word of the day to describe these leaders. If you listen to Glenn Beck much, you know this is just the updated term the Progressives used to call “dictator” – a person charged with solving a country’s problems, without regard to democracy or representative government. Surely we will now see that the trains of Italy will again run on time!