Green Room

Snowflakes upon snowflakes

posted at 5:50 pm on May 10, 2010 by

An email from a friend:

So the ministers got together and pledged 750 billion Euros to keep the Euro from falling. That seems a bit like propping up snowflakes with snowflakes.

Peter Boone and Simon Johnson call this “an alliance of convenience between troubled governments in the south of Europe and the north European banks (and implicitly, north American banks) who enabled their debt habit.” Tyler Cowen points to the implications of large shadow economies, where the shadows are filled by those escaping oppressive taxation.

Exit question: When the EU says it will defend the euro “whatever it takes,” should it be any surprise that speculators will want to test that stand? Haven’t you created a one-way bet?

UPDATE: Oh, wait. It turns out the money that doesn’t come from the IMF has to come through national parliaments. Kevin Drum provides details and asks

I wonder if there are going to be any recalcitrant parliaments out there? And I wonder if any of the dozen or so fights it’s going to take to get approval for this fund will just end up making Europe look even more feckless than it already does? Remember what happened when Congress initially voted against TARP?

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I saw a news report that Germany and Britain have already threatened to withdraw. There is a rumor that Germany is planning to reinstitute the DeutscMark.

sabbahillel on May 10, 2010 at 10:05 PM

The EU-tanic is going down…get to the lifeboats while you can, European nations.

Dark-Star on May 10, 2010 at 11:27 PM

The EU is going to fall apart, and I don’t want them taking us down with them. We need to support the states that move toward fiscal responsibility and cut loose the rest. No more Sugar Uncle Sam.

Kissmygrits on May 11, 2010 at 11:33 AM

No more Sugar Uncle Sam.

Kissmygrits on May 11, 2010 at 11:33 AM

That’s coming soon enough…and it won’t be pretty for all the nations we’re propping up if we don’t acknowledge reality ASAP.

The only choice will be if our departure is made in an orderly and planned manner, or a frantic exit that leaves behind chaos in the vacuum we leave behind.

There is no third option at this point. We’ve reached the financial point of no return.

Dark-Star on May 11, 2010 at 1:39 PM