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2011-07-20

Italian Finance Minister compared Germany and its small-minded Chancellor to a first-class passenger on the Titanic. When the ship hits the iceberg, everybody goes down together

Guilio Tremonti, the Italian Finance Minister, last week compared Germany and its small-minded Chancellor Angela Merkel to a first-class passenger on the Titanic.

The underlying message is the same: You can be sailing in coach or you can be in the 1st class compartment. But when the ship hits the iceberg, everybody goes down together — Germans, Italians, Greeks, Irish and French alike.

By Marshall Auerback, a portfolio strategist and hedge fund manager.
From New Deal 2.0 via  nakedcapitalism, 20 July 2011

All euro zone members have an institutional wide problem of not being able to fund deficits, given that the countries of the euro zone have all acceded to impose gold standard conditions on themselves by forfeiting their fiscal freedom

The constant stop-gap measures being introduced on a seemingly ad hoc basis are leading toward a very unpleasant dissolution, the end result for which could be Europe’s “Lehman” event.

Meanwhile, the iceberg is approaching rapidly.

The only alternative solution on offer is a long and painful period of austerity to reduce their costs through cuts in wages and living standards, the so-called “internal devaluation” — in reality, a one-off coordinated reduction of wages and prices across the board.

It is, as I have argued before, more like an “infernal devaluation.”

Rolf Englund: Jag skrev nyligen på denna blog:
- Om man inte kan låta sin valuta falla, vilket man inte kan i EZ, eftersom man inte har en egen valuta, är den sedvanliga devalveringsvägen stängd. Då får man i stället göra vad som ibland kallas en intern devalvering, sänka lönerna i nominella tal, lönesänkningar. Sverige gjorde ett misslyckat försök med detta i Ådalen 1931, skrev jag nyligen på denna blog.

Merkel, of course, claims to be safeguarding the interests of German taxpayers.

It is amusing to hear the Germans talk about the “cost” to them of staying in the euro zone as a result of “funding” so-called “profligates” such as Greece or Italy. First of all, the “funding” comes from the ECB which creates new net financial euro denominated assets at will, not the Germans.

Full text at nakedcapitalism

Marshall Auerback

"Euro-ja som att knyta jollen till 'Titanic'"
Anders Ferm, DN Debatt 7/6 2003

”Man skulle på samma sätt kunna kasta fram påståendet om att om man går med i EMU, är det som att boka om sin Amerikaresa i april 1912 från ett mindre passagerarefartyg till det stora osänkbara fartyget Titanic"
Nils Lundgren om EMU i ”Europa ja – euro nej!” (Fischer & Co)

Ingen hade modet och viljan att lägga om kursen för EU medan tid fanns. I stället lät man korruptionen förbli EU:s mest fundamentala tabu. Därför tvingas vi nu åse hur EU stolt ångar vidare likt Titanic mot en oundviklig katastrof. Till detta EU vill majoriteten i riksdagen kunna överlämna den makt den ännu har kvar.
Björn von der Esch i Dagen 2002-06-06

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