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As I wrote in my column this morning, the Spanish economy is spiralling into debt-deflation.  Monetary and fiscal policy are both excruciatingly tight for a country in this condition. The plan to slash the budget deficit from 8.9pc to 5.3pc this year in the middle of an accelerating contraction borders on lunacy.   You cannot do this to a society where unemployment is already running at 24.4pc.   Either Europe puts a stop to this very quickly by mobilising the ECB to take all risk of a Spanish (or Italian) sovereign default off the table – and this requires fiscal union to back it up – or it must expect Spanish patriots to take matters into their own hands and start to restore national self-control outside EMU.   Just to be clear to new readers, I am not "calling for" a German bail-out of Spain or any such thing.  My view has always been that EMU is a dysfunctional and destructive misadventure – for reasons that have been well-rehearsed for 20 years on these pages.  

This has nothing to do with Greece.  It is not the result of fiscal extravagance over the past decade, or other such Wagnerian myths.  Monetary tightening by the European Central Bank caused Spanish real M1 deposits to fall at an 8 pc rate in mid-to-late 2011 Indeed, the ECB even let the broader M3 money supply contract for the whole eurozone late last year, badly breaching its own 4.5pc growth target.  This was not purist hard-money discipline.  Let us not dress it up with the bunting of ideology, or false authority.  It was incompetence, on a par with the errors of 1931.  Spain’s Bankia fiasco has merely brought matters to head,  A €4bn bail-out in mid-May. A €23bn bail-out two weeks later. You couldn’t make it up.  Ambrose Evans-Pritchard,  27 May 2012 Spain         Monetarism News

In Spain, investors watch for run on banks As depositors worry about their money, observers warn of panic. Banks and the government issue statements aiming to calm the public Los Angeles Times, 27 May 2012

- Europas politiker har slagit in på en ekonomisk kurs som ser ut att leda mot sammanbrott. - Huvudargumentet för en europeisk valuta var att den skulle göra krig omöjliga. Tio år senare har valutasamarbetet lett till motsatsen - Den globala finanskrisen satte i gång dramatiken, men det vore intellektuellt ohederligt att förtiga den roll som valutan kommit att spela. - Har vi glömt lärdomarna från början av 1930-talet, då president Hoover i USA och kansler Brüning i Weimar-Tyskland stod för ett förödande åtstramningstänkande? Det skriver Peter Wolodarski  i  DN  i dag den 27 maj 2012 Närmare att göra en pudel och erkänna att det var bra att Nej-sidan vann folkomröstningen om EMU har Peter Wolodarski inte kommit. Men han har en liten bit kvar.   Det är viktigt att byta sida före eurons Stalingrad.   Kanske det redan är för sent ?   Man skall i alla fall byta sida innan Berlin har fallit.   Det är ändå trevligt med personer som tänker i begrepp som intellektuell heder.   Alltför

(Jag är i gott sällskap. På Timbro fick jag lära mig att Dom Stora Pojkarna som man kunde lita på, dom var på George Mason.) As problems mount in the euro zone, it’s increasingly evident that we’ve been witnessing an institutional failure of monumental proportions. The basic problem is that many people won’t keep their euros in a Greek bank, and perhaps not in a Spanish bank, either, when those euros can be moved to Germany or some other haven.   Yet German citizens do not appear ready to guarantee Spanish banks or, by extension, the whole credit system of Spain and the other periphery nations.   Guarantees of that scope are probably impossible and may also require constitutional changes in some nations.   We thus face the danger that the euro, the world’s No. 2 reserve currency, could implode.   Is there a way out?    There is also talk of forming a true fiscal union, but that seems to be doubling down on a bad idea.   If the euro zone cannot summon enough cooperation now,

When Bear Stearns went bankrupt, the immediate question by the market was not how much did we lose, but who is next? As it turned out, it was Lehman. The rest is history. But it was a recent lesson that is still quite vivid in the memory of traders and investors. Grexit calls into question the very existence of the European Monetary Union. Is it a union from which there may be no exit, an "all for one and one for all" union, or is it a club that one can choose to belong to or to leave?  Dr. Frankenstein’s Europe, By John Mauldin, 19 May 2012 Ms Merkel’s scepticism also stems from bitter experience. She followed investors’ advice and called for private holders of Greek bonds to share the burden of a second bail-out for Greece. Those who have spoken to the chancellor say she feels duped by those investors, who urged her to agree to a restructuring of Greece’s massive debt burden but then told the chancellor that she had also made all other eurozone bon

German central bank chief Jens Weidmann: “The pooling of debt is just one side of a coin where federalism is the other. Governments who are in favour (of eurobonds) fail to point this out,” Sapa-AFP 26 maj 2012 “In those countries which are calling for eurobonds, France included, there is no public debate or public support for the transfer of sovereignty that that would entail. But it's precisely this debate we should be having,” Common bonds “can only come at the end of a long process, which, among others, would require several states to change their constitution, modification of treaties and the creation of more of a budgetary union,” German central bank chief Jens Weidmann said. Full text The Name Is Bond. Eurobond. Europe's debt crisis gets a new potential hero, with Germany once again cast in the role of villain. Foreign Policy 25 May  2012 Full text

Det är finanspolitiken, inte räntan, stupid, skrev jag, senast den 9 april . Nu ser jag att Paul Krugman har skrivit en bok på samma tema: med budskapet : Why the US government should get on with more spending. Boken heter End this Depression Now! och är på  272 sidor. Om boken hos Amazon Så här skriver anmälaren i Finaancial Times den 12 maj 2012: You can argue otherwise, and some economists do, but most evidence from the last few years suggests that Krugman is basically right. If high unemployment was structural then inflation would have started to go up by now. US Treasury bond yields have gone down even as US debt has risen. A preponderance of studies show that, when interest rates are stuck at zero, government spending has a large effect on the economy. Full text here

Bubble in Austerity Shows Europe Is Ignoring 1997 Asia showed the world the danger of ill-timed austerity, denial and slavish devotion to conventional economic policies amid very unconventional circumstances.  Why, then, is Europe resorting to a crisis-response toolbox that Asia clearly demonstrated doesn’t work?  Bubble in Austerity Shows Europe Is Ignoring 1997 - Bloomberg

Sweeping reforms to shift the burden of rescuing failing banks from taxpayers to bondholders are to be unveiled by the European Commission, despite fears it will further rattle nervous bank investors. When a bank is deemed to be failing, regulators will win extensive powers to write down non-guaranteed deposits and senior unsecured bondholders, according to draft proposals obtained by the Financial Times. Fresh fears as EU finalises reform plans - FT.com

Ms. Merkel was suddenly suggesting that some stimulus for Greece and others to spur growth might be possible   But, on Wednesday, she was again insisting on the same draconian budget cuts and the same unreachable targets as the price of aid to Greece and other indebted euro-zone nations.   By this point, there should be no debate: Austerity has been a failure, shrinking economies and making it ever harder for indebted countries to repay their debts.   New York Times, editorial, 24 May 2012   Full text Merkel gillar inte Eurobonds Senaste nytt

The silliness of a parallel currency Peter Bofinger nailed the issue in the debate on the parallel currency, the “geuro” as proposed by Thomas Mayer. Bofinger says a geuro is worse even than a grexit because it translates prices and wages into geuros, while keeping debts in euros. The country would be immediately bankrupt, and the citizen would revolt.

Jonung: ”En parallell valuta i Grekland det bästa" Att döma av den ekonomiska historien ligger en parallell valuta närmare till hands än att Grekland inför en helt ny valuta.  En parallell valuta kräver inget hemlighetsmakeri, den kostar väldigt lite, den kan införas snabbt och den behöver inte skapa panik. Lars Jonung, professor i nationalekonomi och ordförande i Finanspolitiska rådet,  Ekot 24 maj 2012 Full text   Gavyn Davies: A parallel currency for Greece? I am inclined to believe that a parallel currency could only work in a parallel universe, not the one we currently inhabit. It may be just a stepping stone to the inevitable combination of outright default, inflation, and departure from the eurozone which may unfortunately await Greece.  But it would be very nice to be wrong about this.  24 May 24, 2012 Gavyn Davies  Full text När sade Jonung vad till Bildt och Wibble?   Dåvarande riksbankschefen Bengt Dennis: "En ständig

The future of the European Union The choice A limited version of federalism is a less miserable solution than the break-up of the euro The Economist print 26 May 26 2012 For two crisis-plagued years Europe’s leaders have run away from this choice. They say that they want to keep the euro intact — except, perhaps, for Greece. But northern European creditors, led by Germany, will not pay out enough to assure the euro’s survival, and southern European debtors increasingly resent foreigners telling them how to run their lives. Only if Europeans share a sense of common purpose will a grand deal to save the single currency be seen as legitimate. Only if it is legitimate can it last. If it is to banish the spectre of a full break-up, the euro zone must draw on its joint resources by collectively standing behind its big banks and by issuing Eurobonds to share the burden of its debt. Rumours of bank runs around Europe’s periphery have put savers and investors on alert (see article).

Daily Telegraph 24 May 2012 Daily Telegraph Finance

An examination of European money flows and central-bank balance sheets suggests this is so. Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders. Germany’s banks were Greece’s enablers. Thanks partly to lax regulation, German banks built up precarious exposures to Europe’s peripheral countries in the years before the crisis. By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford. When the European Union and the European Central Bank stepped in to bail out the struggling countries, they made it possible for German banks to bring their money home. As a result, they bailed out Germany’s banks as well as the taxpayers who might otherwise have had to support those banks if the loans weren’t repaid. Unlike much of the aid

Om man har en sedelpress går man inte i konkurs, skrev jag den  4 november 2011 Why the sovereign debt of eurozone countries seem to be far more fragile than that of countries with their own central banks, skrev Martin Wolf i  Financial Times den  23 maj 2012. A member of a currency union does not have a central bank of its own. This then creates liquidity and default risk in the market for government bonds. Without a central bank, a time may arrive when the government is unable to refinance its debt. That creates tail risk – the likelihood of being trapped in debts whose maturity will be forcibly extended or on which the government will default. Paul de Grauwe has put the point forcefully , skriver Wolf. Members of a monetary union issue debt in a currency over which they have no control. It follows that financial markets acquire the power to force default on these countries. This is not the case in countries that are no part of a monetary union, and have kept control ove

Sverige ska vara nöjt att det inte är med i eurosamarbetet. ”Med facit i hand är det lätt att vara efterklok”, säger finansmarknadsminister Peter Norman. Dagens Industri 22 maj 2012 Medlemskap i EMU är en ödesfråga för Sverige. Den förtjänar att tacklas med seriositet och kunskap. Hittills har ingen ja-sägare klargjort vilka konkreta åtgärder man tänker sig ska vidtas för att göra oss konkurrenskraftiga gentemot övriga EU-länder, vilket också Sjunde AP-fondens VD Peter Norman och dess chefsanalytiker Daniel Barr framhöll i lördags 5/4. Carl Rosenblad, Dagens Industri 8/4 2003 Vi vet i dag hur den ekonomisk-politiska regimen ser ut vid ett utanförskap. För ett meningsfullt val krävs att vi medborgare också får veta hur den ekonomisk-politiska regimen kommer att se ut utan en svensk penningpolitik. Peter Norman VD, Sjunde AP-fonden Daniel Barr chefsanalytiker, Sjunde AP-fonden Dagens Industri 5/4 2003

RE: The Ultimate Article about EMU and the Eurocrisis Time to plan a velvet divorce for the euro In the coming months, Europe may be forced to decide Sacrificing national self-rule on the altar of the euro is inherently objectionable – and would invite a nationalist backlash across Europe.   Gideon Rachman, Financial Times 21 May, 2012 I had written repeatedly that the eurozone was a flawed construction that was likely to collapse.  If that was the case, I was asked, would it not be better to break the whole thing up now? At this point, I heard myself becoming shifty and evasive – “The trouble,” I replied, “is that I keep being told that a break-up would cause a catastrophe. Until I can tell you convincingly why that’s untrue, I can’t responsibly advocate it.” But prevarication is no longer good enough. In the coming months, Europe may be forced to decide. It is true that the transition from here to there will be painful and dangerous. My colleague Mart

Those readers who have been berating me for years for even considering the possibility of a country leaving the euro have recently fallen silent. You may think this is premature. Personally, I have always thought that if you are going to be a forecaster you should specialise in being early. Roger Bootle, Telegraph 20 May 2012 What should be the stance of the British government? Its view has been that a break-up of the euro would be a disaster, even to the extent of supporting moves towards full fiscal and political union to prevent it. This strikes me as completely wrong. European history has been about various powers trying to dominate the continent and Britain trying to stop this. First it was Spain, but in the last four hundred years it has been either France or Germany. Now we have both trying to do it together, with Spain and the others in tow!  ... There is a tendency for our governing elites to identify the interests of Europe with wha

Nyligen hade jag här ett inlägg med rubriken "Grekland, Mercedes, Staten och Kapitalet" . En kvinna i Grekland har köpt en Mercedes. Daimler-Benz AG har fått sina pengar för bilen. Det är någon bank, kanske Deutsche Banks filial i Grekland, som, dumt nog, har lånat ur pengarna till kvinnas bilköp. Kanske bankerna har ett ansvar, var min tanke. Nu läser jag en artikel av ingen mindre än Mohamed A. El-Erian. Jag tror på Mohamed. brukar jag säga. Här ett utdrag med länk. Hold on, I hear you say. For every debt incurred there is a credit extended. You are right. The over-lending was so widespread that at one point it drove down the yield differential between Greek and German bonds to just six basis points Mohamed A. El-Erian, Project Syndicate 17 May 2012 Greece’s private creditors were more than happy to pour money into the country, only to shirk their burden-sharing responsibilities when the artificial boom could no longer be sustained. The over-lending was so

British Deputy Prime Minister Nick Clegg: The UK is not going to leave the European Union. Of course not. We are inextricably wound up with Europe. In terms of culture, history and geography, we are a European nation. SPIEGEL: Does your euroskeptic coalition partner, Prime Minister David Cameron's Conservative party, agree with that? Clegg: Of course. The Conservatives don't believe in leaving the European Union. SPIEGEL: But the electorate does. Polls indicate that a clear majority would vote in favor of leaving the EU, if there was a referendum. Clegg: Opinion polls across the EU -- in the Netherlands and in the south (of Europe) -- are showing a growing disenchantment with the EU as a whole. The UK is by far not alone in this regard. We are losing faith in the EU and its institutions -- for understandable reasons, considering the economic problems we face. But that doesn't mean that it makes sense to forecast the breakup of the EU as a wh

Det demokratiska underskottet Samarbetet i EU bygger på en metod som introducerades av Frankrikes utrikesminister Schuman. Det fanns dock en konflikt inbyggd i den överstatliga unionen ända från början, och det visste Schuman. Att begränsa medlemsstaternas suveränitet var ingen liten sak, ens för honom.  Annika Ström Melin, DN 9 maj 2012

Despite efforts at official reassurance, no one really knows the consequences of a Greek exit from the euro zone, or how rapidly big countries like Spain and Italy, and their banks, will feel the effects.  The point of no return may be approaching faster than anyone anticipated   Steven Erlanger, The New York Times 20 May 2012 Some put it simply, like economist Rolf Englund who campaigned against the euro back in 2003. “I think the euro will collapse before Sweden joins”   RT (Russian Television) 17 February 2012

Article 66 of the Treaty on the Functioning of the European Union says the freedom of capital movement can be suspended but only in relation to third countries.  The article can be invoked to stop Greek outflows to Switzerland, but not to Germany, at least not legally.  That is one of the reasons why a eurozone exit cannot be legally accomplished inside the EU. Wolfgang Münchau, Financial Times 20 May 2012 A bank run is now happening within the eurozone Gavyn Davies, Financial Times May 20, 2012  Konstruktionen kring euron har inte varit fel Euron är numera kärnan i det europeiska samarbetet. Utan den reduceras samarbetet till ett frihandelsområde, mindre långtgående och mindre betydelsefullt än den politiska union som med en gemensam valuta möter globaliseringens utmaningar. Jan Björklund, Birgitta Ohlsson, Carl B Hamilton och Olle Schmidt, SvD Brännpunkt, 9 september 2011 Full text – Det är inte euron som är under attack Fredrik Reinfeldt m

Kenneth Bengtsson, ordförande Svenskt Näringsliv: – Jag skulle vilja se ett större och enklare Europa.  Han ser gärna ett EU som tar med länder utanför Europa, exempelvis Marocko EMU-anslutningen. – Det är inte rätt tid att väcka den frågan just nu. Källa: Europaportalen, 18 maj 2012 Kenneth Bengtsson beskriver situationen i Europa som ett stålbad – inte minst för de sydeuropeiska länderna ­– och som en svår en prövning för hela EU-samarbetet. – Jag tillhör dem som tror att det alltid kommer något gott ur en kris. Att en kris snarare svetsar samma på sikt även om det blir ett hack i kurvan just nu. - Men det finns goda föredömen, som exempelvis Lettland. Inför euroomröstningen för nio år sedan var Svenskt Näringsliv en av de mest ivriga påskyndarna för en svensk anslutning. I dag är tonen en annan. – Det är inte rätt tid att väcka den frågan just nu. Men ska vi ha ett starkt Europa krävs också i fortsättningen en stark gemensam valuta.

För en stund sedan skrev jag om Peter Wolodarski, Argentina, Grekland, IMF och Tim Geithner Anledningen var en artikel av Peter Wolodarski som var mycket bra, för att komma från en tidning, som, likt Svenska Dagbladet, är för en svensk EMU-anslutning. Wolodarski är i alla fall så intellektuell att han uppenbarligen våndas inför eurokrisen. - Om Grekland faller – vilket verkar troligt – kan mycket väl Spanien, Portugal, Italien och Irland stå på tur, varnar han för. - Den ordinerade krismedicinen, i praktiken ekonomisk svält, fungerar lika illa i Grekland som i Argentina 2001, skriver han. - Inget talar för att besparingarna får fart på tillväxten inom överskådlig tid eller att väljarna accepterar utvecklingen, konstaterar han. Vad skall då en fattig Ja-sägare göra? - Fortsätta skriva av skulder, samtidigt som ECB tillåter högre inflation och ser till att det europeiska banksystemet fortsätter att fungera, är Wolodarskis förslag till ny strategi. Har han tänkt på vad de andra k

Precis som i Grekland framkallade krisen i Argentina ekonomiska, politiska och sociala omvälvningar. IMF krävde i likhet med dagens EU/IMF att Argentina skar ned ordentligt i sina utgifter för att få nya lån. I efterhand har valutafonden medgett att man skrev ut en felaktig kur för Argentina. År 2004 konstaterade IMF att man borde ha ändrat strategi när det stod klart att nya åtstramningar inte gick att genomföra. Peter Wolodarski, Signerat DN 20 maj 2012 For a vision of how the Greek debt meltdown is going to end, look no further than the International Monetary Fund's post mortem into a similar crisis that came to a head almost exactly a decade ago - Lessons From The Crisis In Argentina. Originally published in October 2003, this policy review document was signed off by a then relatively unknown IMF official called Tim Geithner, now the US Treasury Secretary no less. Jeremy Warner, Daily Telegraph, 4 July 2011

Contrary to what some people may think, I don’t regard anyone who disagrees with me as necessarily a mendacious idiot. Economics is hard, and people will disagree. Sometimes people will give advice with the best of intentions that turns out, in hindsight, to have been disastrous; that’s a tragedy but not a sin. But here’s what is indeed a sin: choosing your position based on what is personally convenient. Paul Krugman, New York Times,  11 May 2012 - Even recently, “leading economists” would look at you askance when you were talking about possible eurozone break-up, insisting your views were “mad”. - We public non-believers have endured character assassination, whispering campaigns, the whole shebang – I kid you not – as we challenged a system built, not on economic logic, but on political hubris and vanity. Liam Halligan, Telegraph 19 May 2012 Europe’s hubristic imperial overstretch    Heder, sanning och rätt, klicka här

Man behöver inte tro på Keynes teorier från 1930-talet för att se både den politiska och ekonomiska faran i en finanspolitik som spär på nedgången  Det långsiktigt nödvändiga – att sanera skuldsatta ekonomier – är inte en klok strategi i ett akut läge. Det skrev Peter Wolodarski i DN 13 maj 2012 - På kort sikt behövs dessvärre mer stimulanser och hjälp till banksystemet för att ekonomin ska kunna växa, tillade han. Tidsandans kraft är stor. Peter Wolodarski anser sig behöva ta avstånd fron Keynes, 1900-talets främste ekonom. - Man behöver inte tro på Keynes teorier från 1930-talet för att se både den politiska och ekonomiska faran i en finanspolitik som spär på nedgången, skerv han. Men däri har han fel. Antingen, kan man, som Hoover och  Brüning och Angela Merkel, anse att nedskärningar i statens utgifter och skattehöjningar, som leder till balans i statsbudgeten, är den rätta vägen. Eller, kan man som Keynes och Peter Wolodarski anse att den bortfallande efterfrågan, som fr

- Det är lätt att förstå att väljarna sparkat ut de inkompetenta mutkolvar som styrt landet i fyra decennier, hette det i en DN-ledare häromdagen , signerad Gunnar Jonsson. Men det är till dessa partier,  inkompetenta mutkolvar, som Dagens Nyheters ledarredaktion sätter sitt hopp. Varför använder inte euroanhängarna bättre argument, kan man undra. Svaret är givetvis att dom inte har bättre argument än så.

En kvinna i Grekland har köpt en Mercedes. Daimler-Benz AG har fått sina pengar för bilen. Det är någon bank, kanske Deutsche Banks filial i Grekland, som, dumt nog, har lånat ur pengarna till kvinnas bilköp. Banken har nu bekymmer.  Men skall vi lägga skulden på den grekiska kvinnan som fick lån i sin bank, köpte en bil och fortfarande amorterar på lånet, om hon numera inte har blivit arbetslös? Kanske den Moral Hazard som spökar i debatten inte alls handlar om greker, utan, som vanligt, om inkompetenta och överbetalade bankdirektörer? --- Mohamed A. El-Erian om Grekland, Mercedes, Staten och Kapitalet  Klicka här

Det var pinsamt att i dag lördag på Ekonomiekot höra Cecilia Hermansson , chefekonom på Swedbank debattera eurokrisen med Stefan de Vylder. Hon låter som Annie Lööf , klyschorna rinner ur munnen. Till hennes försvar kan anföras att hon har en svår uppgift,  att försvara regeringens, Löfvens och sin arbetsgivares uppslutning kring euron. Och hon vill väl behålla jobbet. Kanske kan hon därmed också med tiden kanske få Nicolin-priset, likt P J Anders Linder . Vilken fråga som än ställs blev Cecilas Hermanssons svar detsamma, "Strukturreformer". Hon lyckas få med tre "strukturreformer" på en inandning. Hon medger att det kommer att ta några år innan strukturreformerna får effekt. Kan hon verkligen tro att Grekland, Portugal, Spanien och Italien har flera år på sig?   Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. Things could fall apart with

Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. Things could fall apart with stunning speed, in a matter of months, not years. Paul Krugman, New York Times 17 May 2012

Financial Times May 18, 2012 7:47 pm Europe’s hubristic imperial overstretch By Andrew Roberts For the first French empire and the Nazi empire the moment historians call “imperial overstretch” is simple to spot: they both invaded Russia.  Historians will long debate the hubris moment for the Roman empire. For my money, it was when Diocletian established the Tetrarchy in 293AD, splitting the empire into four, a classic sign of hubris. So when was it that the Brussels empire over-reached, and became more concerned about its own expansion and glory, its own ambitions for hegemony, than about the daily economic wellbeing of its citizens? The European Economic Community’s Edinburgh Conference of December 11 and 12, 1992. It was then, after the Danes had rejected the Maastricht treaty the previous June, that the EU decided not to take their no for an answer.   Too much was bound up in the project, too many hopes of one day supplanting the US as the top-

Are the Germans destined to save the euro? It is an article of faith in Berlin that the single currency must survive, whatever the cost. Somewhat unfortunately, given the expression’s usage by the Third Reich, she has referred to the single currency as “Schicksalsgemeinschaft”, or a community of fate, a historic task that Germans must carry out whatever the costs. Jeremy Warner, Telegraph 17 May 2012 The idea that Germany will throw its hands in the air in disgust at recent developments, and give up on the whole thing, is almost certainly misguided. It’s curious, to put it mildly, that a country as fastidious as Germany should have committed itself to an economic experiment as dysfunctional as European Monetary Union. But as Angela Merkel has said, the euro is more than just a currency. Full text "Der Euro ist unser gemeinsames Schicksal, und Europa ist unsere gemeinsame Zukunft" Förbundskansler Merkels ord kommenteras Rolf Englund blog 16/12 2010

"In the autumn of 2011, the conditions were very dangerous," one of its executive directors, Benoit Coeure, told me. "European banks were facing severe difficulties to fund themselves, to access finance, and we were very close to having a collapse in the banking system in the euro area , which would have also led to a collapse in the economy and to deflation. And this is something that the ECB could not accept." Robert Peston, BBC Business editor, 17 May 2012 So what is going to happen: creation of the European superstate and survival of the euro, or a disastrous monetary and political disintegration? Robert Peston, BBC Business editor, 17 May 2012 Jean-Claude Trichet - president of the European Central Bank during many of the euro's formative years - made a similar point. "In a single market with a single currency… it seems to me that Europe could go for a federation." Robert Peston, BBC Business editor, 17

A Greek exit from the euro area has the potential to be the European Union’s most economically and politically destructive event of a generation. Bloomberg Opinon, Editors, May 16, 2012 1:00 AM GMT+0200 Unfortunately, Europe has reached the point where it must prepare for such an outcome. First, Europe would have to absorb immediate losses on money lent to Greece. The country has about 400 billion euros in external debts, which its government, banks and companies would probably pay only in part or in drachmas. Second, European officials would need a plan to stop bank runs. As soon as Italian, Portuguese, Spanish and maybe even French depositors see footage of Greeks clamoring for their savings, they’ll want to get their euros out of local banks as quickly as possible. Bank holidays and bans on withdrawals would help only temporarily. To prevent a collapse of the banking system, Europe’s leaders would have to guarantee all deposits in euro-area banks, a move that would put German

Man kan inte både äta kakan och ha den kvar, brukar våra vanligaste ekonomer och politiker säga. Det är ju sant. Men varför skulle jag vilja ha kakan kvar? Den blir bara gammal. Nej, jag säljer den i stället till Grekland på kredit. Den skattefuskande köparen i Grekland får ett lån av den grekiska banken för att köpa kakan (eller Mercedesbilen). Jag får mina pengar, köper en annan kaka, och äter upp den. So far so good. Nu ingår skulden för kakan i den grekiska utlandsskulden. Låt oss utreda exakt hur det gick till. Låt oss säga att kakan kostade en euro. Den åts ju upp i Grekland, som, tyvärr för grekerna, ingår i eurozozen (EZ). Den grekiska banken utbetalade en euro till den kakätande skattefuskande greken. För att fylla på sin kassa lånar banken en euro av sin centralbank,den grekiska centralbanken (som är en NCB, National Central Bank, en centralbank utan sedelpress. Eftersom den grekiska NCB inte har någon sedelpress måste den låna en euro av ECB. Den grekis

Institutet för Offentlig och Internationell Rätt (IOIR) Professor em. Jacob W. F. Sundberg

“Provopoulos told me that of course there’s no panic but there’s great fear which can evolve into panic,” the president said. Greek President Karolos Papoulias was told by the nation’s central bank chief that financial institutions are worried about their survival as Greeks pull out euros Greeks have withdrawn as much as 700 million euros and the situation could worsen according to the transcript of the president’s meeting with party leaders on May 14  Banks in downtown in Athens were open as normal today with no signs of unusual activity. Bloomberg, May 16, 2012, 10:35 AM GMT+0200

Could the euro survive a Greek exit? The point is that the eurozone crisis is a sovereign debt crisis and an inextricably connected banking crisis   Any business of any nationality will find it extremely difficult to leave its money in euros in a bank in a country perceived to be at risk of following Greece out the door. Citizens too, if they are able to do so, have a huge economic incentive right now to take their money out of Greek banks, and either hold it in cash or transfer it to a perceived safe haven, such as Germany. A Greek departure from the euro, which accelerated withdrawal of cash from banks in other vulnerable economies, would surely create the imperative for yet more emergency ECB lending to banks. And since the European Central Bank and the national central banks insist on lending only in return for collateral, there is a danger that banks would shortly run out of collateral of sufficient quality. Which means the ECB would face the uncomfortable

Good Morning Greek president warns of a bank run – and Spain’s spreads top 500bp for the first time Eurointelligence 16 maj 2012

Fler kineser – och allt färre finländare - DN.SE

After Greek voters rejected austerity in last week's election Europe has been searching for a Plan B It's time to admit that the EU/IMF rescue plan has failed. Greece's best hopes now lie in a return to the drachma. At the Chancellery in Berlin, the television images from Athens now remind Merkel's advisers of conditions in the ill-fated Weimar Republic of 1919-1933.  And, as in the 1920s in Germany, the situation in Greece today benefits fringe parties on both the left and the right. The country's political system is unraveling, and some advisers even fear that the tense situation could lead to a military coup. Der Spiegel, Staff, 14 maj 2012

Eurodämmerung Paul Krugman, New York Times, May 13, 2012 Some of us have been talking it over, and here’s what we think the end game looks like: 1. Greek euro exit, very possibly next month. 2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany. 4b. End of the euro. And we’re talking about months, not years, for this to play out. Read more here Månader? Det är väl mer fråga om veckor, dagar eller timmar?  

I had a lively debate on this question this week with the BBC's veteran diplomatic correspondent James Robbins on the World Service. I use the word "veteran" advisedly, but as James reminded us, he has been covering European issues for so long, he was there in Maastricht in 1992, when the basic rules for the single European currency were first agreed and signed into law. In the programme we also heard from some distinguished economists from around Europe, all with a slightly different take.  If they can persuade the German Chancellor that it makes sense, even from the standpoint of the public finances, to balance budgets over a longer time frame, they might actually be able to reach a deal.  Lest we forget, this was precisely the argument that Germany made to its European partners a decade ago, in explaining why it was not going to get its budget deficit back to below 3% overnight. Germany's deficit was above 3% in 2001, 2002, 2003, 2004 a

Det hon skriver- 2012-05-12 - är så förvirrat att man hade bort låta det passera, om det nu inte var så att hon  är  Aftonbladets politiska chefredaktör. Som sådan har hon till uppgift att, liksom Peter Wolodarski och P J Anders Linder, försvara regeringens och S-ledarens linje att Sverige bör gå med i det som kallas euro-samarbetet. - Grekiska politiker har svikit sina väljare i decennier. Europas ledare blundade i sin tur när de grekiska statsfinanserna inte höll måttet, skriver hon. Det är bra. Hon medger således att dom inte blev lurde. Dom blundade. - Euron skulle vara ett politiskt projekt. Men av det finns inte mycket kvar. Folket är bara till besvär. De röstar fel, protesterar, blir desperata. Så vad händer nu? En bra fråga utan bra svar.  - För ekonomerna är det lätt,  påstår hon. - På ena sidan åtstramningsfundamentalister som Anders Borg. - På andra sidan euroskeptikerna. Som ser krisen som ett bevis för att EMU-projektet är omöjligt. Som tror att Greklands

  Regeringen, liksom S-ledaren, är för ett svenskt medlemskap i EMU. Den uppfattningen delas av runt tio procent av det svenska folket.   Regeringen, liksom S-ledaren, saknar stöd bland folket.   De saknar därmed legitimitet, vilket bör rättas till.   Regeringen bör därför utlysa nyval och Allians-regeringens partier, liksom S-ledaren, kan då vädja till folket om stöd för sin linje om att införa euron. Ett konstigt förslag tycker många.  Demokrati kallas det.   Undersökningen som gjordes i höstas visar att stödet för svenskt euromedlemskap bara är 12 procent.   Eftersom undersökningen är gjord förra året och EU:s skuldkris fortsätter finns det anledning att ställa frågan om stödet för euron just nu är ännu lägre.   – Som det är nu, om någon mätte med våra frågor så skulle jag tro att det skulle vara ännu svagare stöd för euron. Men nu är den så jätterekordlåg så det är svårt att komma lägre, säger professor Sören Holmberg.   Ekot 10 maj 2012  

Europe’s painful democratic renewal The crisis has shaken the political establishment in many countries Financial Times, editorial, 11 May 2012

Why the euro is doomed to fall apart: it was an incredibly stupid idea in the first place   Tim Worstall, Senior Fellow at the Adam Smith Institute in London Telegraph, 9 May 2012 Timbro  

Naturligtvis inte. Det förstår väl vem som helst, är det naturliga svaret. Men sanningen är ju den att den svenska regeringen, inklusive Anders Borg, och dessutom  S-ledaren Löfven och Dagens Nyheter och Svenska Dagbladet och alla andra eurokramare, fortfarande håller fast vid den analysen. Förstår dom inte bättre? Jodå, men om dom sade att eurokrisen berodde på euron skulle de vara tvungna att erkänna att de har haft fel om euron i tio år. Det är därför dom talar mot bättre vetande. Det finns ett verb för sådant. Häpnadsväckande nog låtsas t ex DN fortfarande som om eurokrisen handlar om statsfinanserna - de grekiska statsfinanser... mer här Det var ett mycket allvarligt misstag att förespråka en svensk anslutning till EMU. Alla som var för EMU i folkomröstningen har förbrukat sitt förtroende och bör därför avgå ... mer här Barbro Hedvall: Vi har en väldigt dålig ansvarskultur i svensk politik... mer här Englunds lag: Har man sagt A, måste man säga B. Och har man sagt B

It’s too late for Germany to save the euro Despite belated gestures from Berlin, the single currency cannot survive if and when Greece leaves it.  Greece’s motorcycling Marxist, Alexis Tsipras, makes an unlikely champion, with his commuter leathers and largely unrealistic Left-wing views, but he seems to be about the best of a bad bunch right now.    Rightly, he’s rejected Berlin’s austerity programme as “barbaric” and counter-productive (though, incongruously, he rides to parliament on a German-made BMW) It’s too late for Germany to save the euro - Telegraph

Financial Times, 10 May 2012 Skillnaden mellan Micro och Macro Rolf Englund 7 maj med diagram

The Bundesbank, the most hawkish of central banks, has signalled it would accept higher inflation in Germany as part of an economic rebalancing in the eurozone that would boost the international competitiveness of countries worst-hit by the region’s debt crisis. Financial Times, 9 May 2012 Riktiga karlar är inte rädda för lite inflation Rolf Englund 19 februari 2010

 Bank bailouts on this scale may well bring the Spanish state to its knees. If they don’t, Spain’s public and external debt positions will. In order to stabilise its public debt levels after a bank recapitalisation, Spain would have to generate a swing in its public finances that is not only unrealistic, but also self-defeating. The tax rises and spending cuts required would make the recession deeper and cause the primary balance to deteriorate. Full text here  

IEA, Timbros storasyster, The Euro 'end game'? Video http://www.iea.org.uk/multimedia/video/the-euro-end-game

After 386 billion euros in aid pledges for Greece, Ireland and Portugal, 214 billion euros in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase. http://www.bloomberg.com/news/2012-05-09/greek-euro-exit-talk-seeps-into-public-as-officials-air-doubts.html

Europahuset, Regeringsgatan 65, Stockholm, kl. 08.00-18.00 Utrikesministern, EU-ministern och många, många fler finns på plats för att diskutera aktuella frågor.  Dagen avslutas med mingel. Arrangör: EU-kommissionen i Sverige, Europaparlamentets informationskontor i Sverige, Företagarna, LO, Regeringskansliet, SACO, Stockholms Handelskammare, Svenskt Näringsliv, SKL och TCO. Läs mer här Liksom sommaren 1940, innan Spitfires och Hurricanes hade stoppat Luftwaffe, många i England ville ge upp och i stället göra upp med Hitler-Tyskland. När den tyska armén segerrikt rullade österut mot Stalingrad var det skamligt många i Sverige som förberedde sig och Sverige för en tillvaro i ett av Tyskland dominerat Europa. Nu är det skamligt många i Sverige som förbereder sig och Sverige för en tillvaro i ett av EMU-EU dominerat Europa. Varför skall man göra sig omöjlig till ingen nytta när man kan vara realist och få ett välbetalt jobb i Bryssel eller i varje fall