Nice insight from RRReno.
...Most of my leftist friends regarded the financial crisis of 2008 as a “market failure” that vindicated their views about the evils of capitalism. The debt crisis in Europe offers no such consolations to modern liberals, who may now be facing their Waterloo.
That’s because it is very hard to ignore that the Eurozone crisis concerns sovereign debt. Greek bonds have become toxic because of decades of political decisions. Spanish, Portuguese, and Italian bonds may go the same way, and for the same reasons. It is important, therefore, to understand these political decisions, for they have not only created problems in Europe but also here in the United States as well. They can be summed up with a single term: social democracy. Thus at the end of this decade we may find ourselves looking back and summing it up with a single phrase: the end of social democracy.
That is a 'good news/bad news' insight. While the social spending in the Eurozone will be severely curtailed--if not stopped altogether--a 'pendulum-swing' event is not necessarily a good ending.
That's what Paul Ryan's trying to avoid with his "Roadmap." Bending the curve is a helluvalot better than breaking it.
Don't count on Obozo to see clearly what's happening in Europe. As Schoen & Caddell observe, he's an ideology-blinded buffoon who will blow up the (D) Party in the next election. That may be for the best, but it will be a most interesting time, in the Chinese-proverb sense.
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Greek (or Italian, Spanish, Portuguese, French etc.) bonds have NOT suddenly become toxic because of decades of political decisions. This is wrong.
These bonds have suddenly become toxic because:
1. These nations are unable to use currency devaluation as a necessary adjustment to combat collapsing GDP and high unemployment and tax revenues, making default the only viable option.
2. The Germans are politically incapable of backstopping the periphery nations' sovereign debt crisis even though they signed on to European unification years ago and are required to do so.
There is no "contagion" in Europe without both of these elements. Europe wants to be half pregnant. They either issue some sort of Euro-bond (therefor backstopping all Eurozone member sovereign debt) or they dissolve.
It's that simple.
Strupp, the Greeks made a political decision to join the ECM.
Also: you state that the Germans cannot 'politically' rescue....
Those ARE "political" decisions, Strupp....
Sure they're political decisions.
Allowing Greece, Italy, Spain, etc. to openly fudge convergence criteria, primarily designed and enforced by the Germans in order to expedite admission of periphery nations into the EMU, was also a "political" decision.
Now Germans are complaining because this decision blew up in their faces.
Is Europe "unified" or not? It's up to them. Short term loan guarantees aren't going to do anything. Either take a haircut and secure southern Europe's sovereign debt or work toward an orderly withdrawl from the EMU and let these economically weaker nations out of a monetary union that's slowly drowning them.
Oh, yah, and by the way, paying Greek gummint workers not to work is also a political decision.
The story on Italy will be the same.
But on Italy there's more: no children. They're in the same spot as Japan: there will be no country by 2050 or so.
So at least for the Italians, they can say 'who cares?' and they'll be right.
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