Archive for the ‘Euro Crisis’ Category

The Hundred-Billion-Euro Bomb: Euro-Zone Central Bank System Massively Imbalanced – SPIEGEL ONLINE – News – International

March 6, 2012

So, the will of the political class to preserve the union is strong. It is the rabble that might not like the terms.

After weeks of work, Sinn had assembled enough pieces to create a picture that would make any one shudder: Since the 2007 financial crisis, immense imbalances have formed within the otherwise harmless payment system that exists between the central banks of the 17 euro-zone member states. While Italy, Spain, Ireland, Portugal and Greece, all hit hard by the debt crisis, show deficits totaling over €600 billion, the claims owed the Bundesbank have climbed to €498 billion.

‘Caught in a Trap’

As long as the monetary union continues to exist, this isn’t a catastrophe. The money is virtual, created by central banks, and its existence doesn’t mean that an equivalent amount is lacking elsewhere. But as soon as a country leaves the euro zone, or the currency union collapses entirely, things get critical.

via The Hundred-Billion-Euro Bomb: Euro-Zone Central Bank System Massively Imbalanced – SPIEGEL ONLINE – News – International.

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Italy’s Mason-Dixon Line: Euro Crisis Fuels South Tyrolean Separatist Dreams – SPIEGEL ONLINE – News – International

March 6, 2012

Scary. So, if Italy leaves the Euro, does Italy fragment into Northern and Southern Italy?

What is happening in Italy’s northernmost and wealthiest province mirrors the larger euro crisis: The rich north doesn’t want to pay for the poor south. In the 1950s and 60s, this attitude was reflected in the “Away from Rome” movement, which, until recently, was considered just as outmoded as the prejudices of Northern Europeans against Southern Europeans that have now been brought to the surface by the crisis.

via Italy’s Mason-Dixon Line: Euro Crisis Fuels South Tyrolean Separatist Dreams – SPIEGEL ONLINE – News – International.

The Failure of the Euro

March 5, 2012

The Failure of the Euro.

The fragmentation of the Euro foretold at the inception in 1999. The overarching argument was similar to the argument I made in 2007 about the Euro. The economic union combines together a large heterogeneous group of countries that will have to adopt divergent fiscal and monetary policies to address the problems of the Great Recession.

Nuclear Phynance

March 5, 2012

Nuclear Phynance.