Skip to main content

J'accuse... pt 1

The crisis of the Euro is not a Greek crisis... it is a German one.


We are told, incessantly, that the crisis is a question of German tolerance for the lazy, un-German economies like Ireland, Spain and Greece. But actually, the issue is the fact that German (and French) banks funded borrowing in those countries in a way that they would not have done at home.


So as Estonia, in common with the rest of the Euro-zone, signs off on a deal that doubles the national debt of the country, we should recognize that this is not a deal to rescue Greece: it is a deal to rescue the German banks.


Estonia, with a GDP per capita less than one third of Germany is handing over 10% of its GDP to rescue the imprudent lending of German financial institutions.


That is wrong.


If the Germans don't want to be rescued by their poorer neighbours, now, would be the perfect time to say so.


In my view the membership of the the Eurozone is already too expensive for the country I came to in order to escape the crushing national debt of the UK. Sure, if the Estonian Kroon had continued as a free currency it would now be trading at a big premium to the Euro, however there is still something morally wrong to see the huge transfer of wealth from  Estonia to Germany.

Comments

Lord Blagger said…
Partly correct. The Greeks are a small economy that doesn't really matter in the larger scheme of things.

However, as you point out, gear that up with fractional reserve banking, and the exposure is much larger.

Add on what I suspect the French banks have done, written large amounts of CDS contracts on the debt, and you get a hint about the current game.

However, its still no the underlying cause. That's government debt, most of which is hidden off the books like Maddoff and Enron
Newmania said…
Thats a great post, really interesting...and short!

Popular posts from this blog

Cicero ReDux

By Special Request of Baroness Scott and Mark Valladares... Cicero's Songs returns: bigger, longer and uncut.
October 1st marked the half way point of the Estonian Presidency of the European Union.  Perhaps for many people such an anniversary is of passing interest at best.  Yet the conduct of the Estonian Presidency is reinforcing just how forward looking and innovative the most northerly of the Baltic States has become.
Estonia is a country that wants to live in the future, and with its openness and innovation, that future seems a lot closer than almost anywhere else in Europe
It is not that Estonia does not “do” the past: the picturesque cobbled streets of old Tallinn have tourist crowds a-plenty enjoying the mediaeval architecture in an Indian summer of sunshine and blue skies.  The real point is that Estonia refuses to be a prisoner of its past. Lennart Meri, Estonia’s President in the 1990s- who spent years of his childhood in Siberia- once told me that the country had to conc…

The American National nightmare becomes a global nightmare

It is a basic contention of this blog that Donald J Trump is not fit for office.

A crooked real estate developer with a dubious past and highly questionable finances. he has systematically lied his way into financial or other advantage. His personal qualities include vulgarity, sexual assault allegations and fraudulent statements on almost every subject. 

He lost the popular vote by nearly three million votes.

He has, of course, been under criminal investigation practically since before he took the oath of office. The indictment of some of closest advisers is just the beginning. His track record suggests that in due course there is no action he will not take, whether illegal or unconstitutional in order to derail his own inevitable impeachment and the indictments that must surely follow the successful investigation of Robert Mueller into his connections with Russia.

However, all of that is a matter for the American people. 

It is also a matter for the American people that Trump is cheating…

In praise of off-shore tax havens

The last few years has seen a spate of "scandals" about the use of off-shore tax havens. The hacking and subsequent leaking of data about who does and does not hold assets in off-shore jurisdictions has become an old perennial in the British press, rather like the "COLD weather happens in winter and QUITE HOT weather happens in summer", whose alarmist capital letter laced headlines are such a lazy part of contemporary "journalism". 

The increasing sophistication of the hackers, whether Russian-inspired or not, has resulted in a steady trickle of information becoming a torrent. After the relatively filleted release of data in the so-called "Panama Papers", the data release of the "Paradise Papers" is even larger.  Of course, just natural curiosity dictates that the off-shore ownership, or even just "ownership", of assets is of general public interest.  Celebrities, from the Royal family to the cast of Mrs Brown's Boys, are …