Our Crises

We’re in the midst of three crises 1) a deficit crisis – caused by fifteen years of marketing oriented politics. 2) a banking crisis caused by us electing bullshit artists, and, 3) a Euro crisis, which has much more to do with Germany than it has to do with Ireland. We’re just caught in the middle of it.

The IMF move is not an attempt to save the banks; it’s an attempt (and one, I believe, which is doomed to failure) to save the Euro as it is.

Some people, like McWilliams and Gurdgiev, say that we should just leave the Euro and default on our loans, but as H.L. Mencken said “for every complex problem, there is a simple solution, and its usually wrong”

Returning to a currency of our own would be of great benefit to the multinational sector (who have access to foreign supplies of capital), but would involve great cost on small business. They would have to start opening new currency accounts so that they would be able to smooth out currency price fluctuations. And of course find the money to put in these accounts. Returning to our own currency would create a new set of costs on business.

Are we better off in the Euro than outside? Probably yes

Can the euro be sustained as it is? Probably no

But when a person’s solution involves the emmiseration of German pensioners (by refusing to pay back their life savings) and they don’t bother to tease out the consequences of such a move then they are just talking shite.

A devaluation of the Euro is vital, but is probably politically unviable for the Germans. Germany is constitutionally prohibited from engaging in the bailout of another European State, they are not allowed lend money to a member state at a rate which is lower than the rate offered to Germany. Either about 2 Trilion in cash has to be printed, or Germany leaves the Euro (with maybe Austria, and the  Netherlands in tow) and the currency submits to a market devaluation as capital flies to this new German currency.