No surprise, once again austerity is contractionary!
France is back in recession, and it’s likely to continue so long as the Fourth Reich reelection is the top priority in Berlin.
The Germans need to stimulate demand at home, encourage a higher level of Euroland inflation, and get off the moral low ground they mistakenly believe is virtuous.
Gorilla says: “Plus ca change, but plus, sil vous plait!”
The ECB’s finally noticed that the Eurozone is in another recession, that austerity isn’t working at all (they’ve noticed but not actually admitted this is true), and that inflation continues to be too low.
So a cut in interest rates, not to zero, but from 0.75 to 0.50%…
Alas, what’s also needed, namely a reorganization of the banking system, a much higher inflation target, the end of austerity, large scale fiscal stimulus, and a clear assumption of the lender of last resort role remain off the table.
Until these things happen, Euroland will limp along, with all eyes on whether the Fourth Reich will win reelection in the fall.
Gorilla says: “Even idiots occasionally are correct!”
Yes, Euroland, where every day brings with it a demonstration that fiscal policies that promote contraction lead to larger deficits!!!
There must be growth! But how to achieve this when you’re destroying millions of lives for no good reason?
Gorilla answers: “The Fourth Reich must be reelected, that’s the one and only reason!!!”
The Portuguese begin a further long march into death and misery on behalf of Angela Merkel’s fully contagious “Reelect The Fourth Reich” campaign:
Gorilla says: “Babalu was vastly more entertaining, but Europeans love their self-inflicted and unnecessary suffering even more than we do!”
It’s Euroland, of course, with the highest unemployment rate ever!!!
And it’s all entirely due to the stupidity and cowardice of the worst political leaders since WWII.
What’s needed is never what’s done:
1) Cut interest rates to zero.
2) Undertake a stimulus on the order of $2 trillion.
3) Announce a higher inflation target of 5% until unemployment gets below 6%.
Instead, we get the Fourth Reich: economics as morality play, austerity as proven failure, and no willingness whatever to take responsibility for the lying.
Gorilla says: “Angela Merkel needs to be out of the picture as soon as possible, so for once do something right, German voters!!!”
Dutch finance minister commits gaffe, says Cyprus is a template for future Euroland crises!!!
And of course, he spoke the truth: banks should be allowed to fail, their shareholders and depositors should be made to pay, and there also must be political accountability.
And of course, that’s not actually what’s happening in Euroland beyond Cyprus, because the Germans are having an election this year and Angela Merkel doesn’t actually want to be held accountable for anything.
So the muddle continues, because there’s no continent wide banking regulation, or deposit insurance, or a central bank willing to make monetary policy for someone living outside the Fourth Reich, or politicians who are anything other than incompetent, craven, and stupid liars.
Gorilla says: “See how the banks run bank runs!!!”
It’s not Greek v. Turk, this time it’s Ireland v. Iceland!
Essentially, the Cypriots have to choose between substantial haircuts for bank depositors (most of them foreigners who like tax evasion and money laundering), which effectively ends the only large industry other than tourism, and leaving the Euro, which will undoubtedly increase tourism and give the finger to the Germans and Russians (no bad thing).
Staying in, as Ireland has found out, means years and years of grinding poverty and high unemployment. Never joining, as Iceland found out, means you can screw the banks, use and devalue your own currency, and get back to sustainable growth more quickly.
Gorilla says, “Saying goodbye to Euroland is always the easiest solution!”
“Wilbur, if you stopped eating processed crap, you’d feel better and so would I!”
If Eurozone governments had actually hit their targets for cutting spending!!!
Meanwhile, the EC is out with another forecast: contraction is indeed contractionary, so no growth for another year and even higher unemployment…
The complete and utter stupidity of the ECB and leaders like Angela Merkel have condemned millions to absolutely unnecessary suffering.
What’s needed is what’s been needed for the last 5 years: 1) a much higher inflation target, at least 4-5% until unemployment falls, 2) a reduction in interest rates to 0% until growth recovers, and 3) a continent-wide stimulus on the order of $1-2 trillion/year for the next 3 years.
And none of this is on offer because European leaders have learned nothing about the economic history of the past 75 years.
Gorilla says: “The Reichstag fire is still smoldering!”
Middle East demos: It’s clear that your average Islamist fanatic has no better friend in the West than your average Christian fanatic. The President, as usual, demonstrated that he is a grown up, while Mitt Romney demonstrated that he is both a liar and unqualified for higher public office. And Netanyahu, certainly the worst Israeli Prime Minister, again attempts to interfere in American politics, all in hopes that his non-seriousness about peace and the non-threat of Iran won’t be noticed.
Euroland: Another week in which the promise and the reality remain far apart. The ECB say it will buy as many bonds as necessary to keep interest rates down, but the insistence on austerity means that Spain, Greece, and probably Italy will need further bailouts. The Germans, meanwhile, continue to play their mendacious, amoral game with millions of the unemployed. It will not end happily until competitive balance is restored, much more money is printed, much higher inflation is tolerated, and the ECB becomes a serious central bank.
Chicago: The teachers strike goes on. As does the curious approach of Americans to education: we say we want the best for our children, but aren’t really willing to pay to make that possible. Chicago’s children need parents who are employed. America needs politicians who put public education first, meaning no more wasting money on charter schools and reforms that line the pockets of reformers while doing nothing much at all for outcomes.
Putin: The thug is also a liar, having stage managed his various publicity stunts in the best tradition of socialist unrealism. A diathlon with Mao up the Volga and Yangtse would cap off this Olympic year.
Dutch elections: Muddling through remains the national impulse. So long as the neighbors don’t notice, the Dutch will continue doing as they please.
Gorilla says: “Only a week to go to my vacation, nothing to see here!”
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