After a glorious month of vacationing from all priorities (including this blog), life has a habit forcefully intruding back in. I come back to find a ton of things I should have posted on but didn’t get around to it. And so, here are abridged versions of some posts that exist only in my head and not on this blog when they should have been.
European Central Bank has a new program, Outright Monetary Transactions, that would see the “ECB buy sovereign bonds of embattled governments in unlimited amounts in an effort to bring down their crippling financing costs and keep the euro zone together.” Add this to the list of steps that will force integration by stealth into a single European state. But as in all things Europeans do, read the fine print to understand the future course of events.
The OMT is conditional on countries having to “apply for assistance from one of the two European rescue funds, the European Financial Stability Facility (EFSF) or the European Stability Mechanism (ESM).” German high courts are to rule on whether the ESM is constitutional under German law.
So, what to make of an unlimited program that is limited by certain countries (i.e. Germany) providing bail-outs to other countries (i.e. Greece) conditional on strict adherence to sane fiscal budgets? Very simple… This is an elegant solution to the problem that German politicians have of perhaps wanting to guarantee some PIIGS and not others. I expect Greece to be out of the Euro by this time next year. Here’s the probable sequence of events:
- German courts rule that the ESM is constitutional but under certain limits or conditions
- Greece may or may not meet those conditions or limits
- Regardless, German politicians will have enough of a cover to deny further bail-out funds from EFSF/ESM to Greece, while allowing funds to other countries like Italy, Spain, etc.
- Because the OMT will apply to those PIIGS that got the bailout moolah, expect their financing costs to stabilize (i.e. not Greece)
- Greece will be forced out of the currency union
The precise sequence and details of events will be determined by future circumstances. I expect them to follow the general course above. Unless something completely unforseen happens… like you know… the Greeks start paying taxes so that their Government can pay for shit.
2. This is a truly despicable and incredible story that makes my stomach churn: Tehelka article on massacre of Muslims in Gujarat.
3. Bill Clinton’s speech was really as good as the praise indicates. If Obama loses in November, it will be because this message came out in drabs too little, too late. Beyond that, every politician should learn from Clinton’s delivery and decision not to treat the audience as completely brainless. There’s also a touch of snake-oil charmer there. Very good speech.