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European debt crisis: Integration, but by brute force of economics

Berlin at night. Seen from the Allianz buildin...

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Now that banks and governments are both in much the same situation in Europe and global markets await with circumspection of their own growth and stability, whilst the Euro makes amends and settles down with its new governance structures and controls, Europe hangs on to a disaster in governance that bring its popular middle of the road monetary union closer to the brink.

The latest measures bring one closer to the belief that the entire EU was just based on the premise of “giving sanctuary” to the weak nations in the bloc and adding inherent stability with 17 currency members and 26 overall, staring at the integration no one wants and waiting for it to get done before they can get on with their lives

Brussels oversight

After IMF’s mollycoddling of yesterday, the Fiscal union, much denied a chance, begins in real earnest in the resulting penury with Brussels empowered to survey and audit current bailed out countries and their budgets. The new measures also empower Brussels to review and present their own alternative budgets to the member nations where the nations have failed to act within  the discipline of the terms and conditions set for extending aid.  It is an important power to exercise and such closer fiscal discipline that would have come from integration would arise from direct intervention and budgetary control by Brussels ( on Berlin’s behalf? ) read more in the FT

A Barnier panel to strip the banks

While Brussels is also releasing a report on common Eurobonds issued by the ECB, that would be the last step in Fiscal union and much to Germany’s delight come when Germany ( though itself seen with 3X the chance of going bankrupt) is the only sovereign left and the other strong economies are dealing with 300 basis spreads to Bunds ( French and Austrian Bonds hit a 250 bps spread yesterday, and Germany itself is trading CDS and bnds at over 120bp now)

However a closer union may not come before all national bank assets, for which fiduciary duty is already assigned to so called national governments, are not just deleveraged to adhere to new capital standards but virtually torn away from retail banks in a late emulation of the ringfencing and Volcker laws to be adopted in the US and UK

The Barnier panel planned to be set up, seem at variance with national policies and the close relationship enjoyed by banks with governments on the continent and also a volte face for internal market commissioner Michel Barnier (FT) This regulation will likely hurt Germany and France as well, and again, is in play because the markets’ downward spiral is out of control and the selling pressure unending


4 comments on “European debt crisis: Integration, but by brute force of economics

  1. Pingback: European Debt crisis: A silly note on a silly situation | The Banking and Strategy Initiative

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  4. spiritofjubilee
    December 15, 2011

    G’Day! Zyakaira,
    Cool Post, No Profile Comment
    I look forward to your next post
    In America: governments, businesses, individuals are now buried under a mountain of debt. A mountain of debt that will never be repaid.

    Who will borrow when they can’t make the payments on the debt that they have already? The math alone calls for a system reset, a debt jubilee.

    Investors are already losing… in a rigged monetary casino that rewards usury, speculation, and currency manipulation while looting main street.

    There is a moral principle that debts should be honored. That is, debts between businesses that buy and sell real products, not bundled ponzi schemes, debts between individuals, between friends and businesses that know each other to be rational and moral, debts based on investments where there is a rational expectation of return.

    There is also a moral principle that unjust debts should be cancelled, and usury legislated against. Debts that are ‘odious’, debts based on fraud, debts to dictators, debts arranged by oligarchs without the consent of the general population (the 99 percent who have been left out of the equation), debts based upon compound interest upon compound interest, that should have been written off long ago, the debts need to be cancelled in a general jubilee. Think outside the box. It’s time for a jubilee.


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