The EuroCrats are fed up. The European people are fed up.
Every Solution concocted at every meeting is revealed to be temporary.
Every attempt to resolve the cause of the problems--causes that are systemic--are impeded by Chancellor Merkel.
Chancellor Merkel's strict demands for Austerity as a one pronged approached has turned the one pronged approach into a weapon.
Chancellor Merkel said, "Why should German taxpayers contribute to a fund to bail out a French bank that will compete with a German bank?"
The argument could be made that it is the Chancellor's job to act first in the interest of Germany. However, as the crisis deepens, Germany will end up as nothing more than last in the line of dominoes to fall.
http://slimviews.blogspot.com/2011/10/oops-euroglitch.html
If anyone has doubts, witness the most recent German bond sale.
Austerity without Economic Development is no solution. Under the management of Chancellor Merkel, The EuroZone has kept Greece and Italy shackled to poverty by keeping Greece and Italy shackled to poverty programmes. Their continued support for Chancellor Merkel is supplication for continued bailout money.
Tim Geithner went to Europe to declaim, "Austerity."
Tim Geithner went on CNN news to declaim, "No country ever cut its way to prosperity."
This is reminiscent of the declamation, "No country ever taxed its way to prosperity," in the first two years of Bill Clinton's first term. There are still those who claim Bill Clinton balanced the budget. In the first two years? http://slimviews.blogspot.com/2011/11/political-math.html
You cannot cut pay, fire people, raise property taxes, and call it a solution. This is evidenced by the continued problems in Greece.
Recently, Papademos said that he would propose legislation that will include austerity and growth. He proposed austerity and cutting taxes. The Press still has not reported on the growth programmes proposed--if any.
Merkel's most recent proposals were:
For investors to contribute to the bailout fund.
For investors to take a 50% loss. Would you invest in anything if the broker guaranteed you a 50% loss?
The next idea floated was for "coupons" to limit investor losses to 20% - 30%. Investors invest to make a profit, not to mitigate losses.
The next idea floated was to go to China for money, to Brazil for money, to the PetroStates for money. This is not a solution. This is a Ponzi Scheme.
Merkel's parsimoniously doling out Pfennige in exchange for an obeisance in exchange for bailouts that continuously do not solve the problem.
Only recently have I heard from Europe what I've been saying.
There is talk about Merkel not being electable with the current numbers.
Privatisation.
A larger bailout fund. (Though I did not put it that way.) This is not the answer, this is the question: http://sidestreetjournal.blogspot.com/2011/12/lender-of-first-resort.html
The path to the solution is simple:
What have you done?
Did things get better? No.
Did things get worse? Yes.
Don't do that!
Read Lender of First Resort. If you can have a lender of last resort, you can have a lender of first resort.
With the Crisis arriving at German shores, the panic will cause Merkel to shift strategy. The Chancellor will promise to consider alternatives. Translation: The Chancellor will sit quietly while others talk about alternatives. The Chancellor will concede they should be looked into. The Chancellor will succeed in delaying any serious change by sending any ideas, viable or not, to a committee.
If anyone believes a committee is a good way to solve problems, I shall refute you with one word--Congress!
Slim Fairview's Predictions--Probable and Possible.
Probable:
The EuroCrats will meet to discuss the EuroCrisis.
Discussions may include a larger bailout fund--this will be challenged.
The discussion will move to Economic Development and Growth. Conditions will be imposed:
- A strict oversight of indebted nations
- Austerity before any capital investment in economic development and growth
- An effort to keep the IMF at a distance to prevent Madame Lagarde from participation.
Treaty modifications will be discussed. These modifications, understandably, will be intended to insulate Germany from what Chancellor Merkel believes to be the impending collapse of the EuroZone Economy. They will also be intended to allow the micro-management of indebted nations.
Possible:
There will be a call for Chancellor Merkel to step down--from other Nations' Parliaments, but preferably from the German Parliament.
A Lender of First Resort agency will be established. This Agency will buy bonds at a favourable and affordable rate to, say, Greece and Italy, and recoup their investment by selling bonds at a favourable rate to investors. While the difference may cost the Agency, it will be more cost effective than continuing the failed bailout solution.
China will pledge to buy €300 Billion worth of the Agency bonds.
Turkey will pledge to buy the bonds.
Brazil will pledge to buy the bonds.
Russia will pledge to buy the bonds.
Greece and Italy will agree to a privatisation plan that allows Greek & Italian government workers to buy stock in many of the entities they work for. The stock purchases will exceed 50% of the issue allowing Greek and Italian workers to retain a majority share.
Foreign Investors will buy stock.
The Greek and Italian Governments will generate revenue from the sale of the stocks, from the "Corporate" tax rate, from the capital gains tax, from income taxes.
The workers have a choice: A government paycheck that may be smaller or, in the event of being fired, non-existent or receiving a paycheck and a profit from the ownership of the privatised company they work for. Benefits will include pensions and health care.
In any event, many of the ideas included in the monographs I've been posting over the last several months, heretofore not discussed, will finally be discussed. The only question is, will they be discussed seriously, or will they merely be discussed to give the appearance of attempting to solve the problems?
Bon chance.
Slim
slimfairview@yahoo.com
Copyright (c) 2011 Slim Fairview
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