
Editorial: Britain’s Self-Inflicted Misery
Deficit reduction based on fiscal austerity has led to a flat-lining economy in Britain. It is the wrong strategy.
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Deficit reduction based on fiscal austerity has led to a flat-lining economy in Britain. It is the wrong strategy.
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Summarizing the Troika'a statement, with some gratuitous commentary

Συνέντευξη στη Δώρα Αμαραντίδου
Η Τάνια Τσανακλίδου ποτέ δεν ζύγιασε τις κινήσεις της, ούτε μάσησε τα λόγια της. Έχει ως στάση ζωής να κάνει πάντα αυτό που λέει η ψυχή της και να υπερασπίζεται την αλήθεια της. Αυθόρμητα, με μια συγκινητική «τρέλα». Στην παρούσα φάση χρησιμοποιεί το τραγούδι ως εργαλείο για να μας προσφέρει χαμόγελο και το συναίσθημα της συντροφικότητας στα δύσκολα που ζούμε. Πήγαμε στο σπίτι της για να μιλήσουμε για την δική της «εΦΑΙΔΡΙΑ στην Πλάκα», όπως είναι ο εύσχημος τίτλος των μουσικών της παραστάσεων που ξεκινούν στο «Ζυγό» στις 14 Οκτώβριου. Την βρήκαμε να παρακολουθεί στην τηλεόραση την ανακοίνωση για τα νεότερα χαράτσια και να φρίττει. «Τι άλλο πρέπει να μας κάνουν για να ξαναβγούμε στο δρόμο;» μας λέει, με οργή. «Τέρμα. Δεν μπορεί να καθόμαστε στον καναπέ και συνεχώς να μας τρομοκρατούν. ¨Κάτω η χούντα του ΜΠΑΤΣΟΚ¨ είναι το ωραιότερο σύνθημα που βγήκε τους τελευταίους μήνες. Πρέπει να πάμε ξανά στη διαδήλωση. Πρέπει να πλακωθούμε και με τα ΜΑΤ. Στην Ελλάδα ζούμε στυγνή δικτατορία και οδεύουμε σε έναν παγκόσμιο οικονομικό πόλεμο.»
Τι αντιλέγετε στο ρητό κυβερνητικό δίλλημα «ή ακολουθούμε τα επώδυνα οικονομικά μέτρα ή χρεοκοπούμε»;
Χρειάζεται πλήρης ρήξη. Η Ελλάδα έχει χρεοκοπήσει εδώ και μήνες και μας λένε ψέματα. Όλη η ιστορία έγινε για να πάμε σε μία ελεγχόμενη χρεοκοπία, ούτως ώστε οι δανειστές να μην χάσουν πολλά. Εμείς θα φτάσουμε πάλι στο μηδέν. Εάν η Ελλάδα κήρυττε στάση πληρωμών το 2009, τότε που ο GAP τα «μαγείρεψε» για να μας φέρει το ΔΝΤ στο σβέρκο, αυτή τη στιγμή θα ήμασταν σε πορεία ανάπτυξης. Ενώ τώρα λίγο- λίγο ξεπουλούν την Ελλάδα και τον πλούτο της και παράλληλα σιγά- σιγά εξαθλιώνουν τις ζωές μας. Από τις αρχές τόσοι οικονομολόγοι φώναζαν και τους έλεγαν γραφικούς. Η Ελλάδα είναι ένας μικρός τόπος, τον οποίο διάλεξαν για να κάνουν το πείραμά τους. Πιστεύω ότι έως τα Χριστούγεννα η χώρα θα κηρύξει στάση πληρωμών και μετά θα γίνει μια κυβέρνηση «εθνικής σωτηρίας» για να ξεπουλήσουν ότι απέμεινε, χωρίς να αναλάβουν το πολιτικό κόστος. Δυστυχώς αυτό θα γίνει εάν τους αφήσουμε να κάνουν ό,τι θέλουν.
όλη η συνέντευξη εδώ :

Το τελευταίο διάστημα, σαν επακόλουθο της αυξανόμενης φτώχειας που οδηγεί σε ανθρωπιστική κρίση, τα πολυϊατρεία των Γιατρών του Κόσμου στην Ελλάδα δέχονται ένα δραματικά αυξανόμενο αριθμό ασθενών. Χιλιάδες άποροι άνθρωποι χωρίς πρόσβαση στο σύστημα υγείας (μετανάστες, αλλά και δυστυχώς Έλληνες πολίτες πλέον) συνωθούνται για δωρεάν πρωτοβάθμια ιατρική φροντίδα, με αποτέλεσμα τα δωρεάν φάρμακα να εξαντλούνται.
Κάνουμε έκκληση για μία ακόμα φορά, στην ευαισθησία των Ελλήνων πολιτών για απολύτως αναγκαίο φαρμακευτικό υλικό .
Πιο συγκεκριμένα, χρειαζόμαστε ΑΜΕΣΑ :
1) Αντιβιοτικά
2) Αντιπυρετικά
3) Αντιβηχικά δισκία
4) Αντιδιαβητικά δισκία
5) Φάρμακα για το στομάχι
6) Δερματολογικές αλοιφές
Πολυϊατρεία :
Αθήνα , Σαπφούς 12 , Πλατεία Κουμουνδούρου, τηλ. 210 3213150 Θεσσαλονίκη, Ίωνος Δραγούμη 65 , τηλ. 2310 566641 Χανιά , Μπόνιαλη 12 , τηλ. 28210 23110
- ΔΕΝ ΔΙΝΟΥΜΕ ΧΡΗΜΑΤΑ
- ΜΑΖΕΥΟΥΜΕ Ο,ΤΙ ΦΑΡΜΑΚΟ ΜΑΣ ΠΕΡΙΣΣΕΥΕΙ (ΑΠΟ ΤΗΝ ΛΙΣΤΑ ΠΟΥ ΑΚΟΛΟΥΘΕΙ) ΕΣΤΩ ΚΑΙ ΑΝ ΕΙΝΑΙ ΧΡΗΣΙΜΟΠΟΙΗΜΕΝΟ (ΕΚΤΟΣ ΑΠΟ ΤΑ ΣΙΡΟΠΙΑ ΠΟΥ ΠΡΕΠΕΙ ΝΑ ΕΙΝΑΙ ΑΘΙΚΤΑ) ΑΡΚΕΙ ΝΑ ΜΗΝ ΕΧΕΙ ΛΗΞΕΙ.
- ΑΝ ΘΕΛΟΥΜΕ ΚΑΙ ΜΠΟΡΟΥΜΕ ΑΓΟΡΑΖΟΥΜΕ ΦΑΡΜΑΚΑ. ΠΡΟΤΕΙΝΩ ΝΑ ΑΦΑΙΡΕΣΕΤΕ ΚΑΙ ΝΑ ΠΕΤΑΞΕΤΕ ΤΗΝ ΤΑΙΝΙΑ (ΚΟΥΠΟΝΙ) ΓΙΑ ΜΕΓΑΛΥΤΕΡΗ ΑΣΦΑΛΕΙΑ. ΠΕΙΤΕ ΣΤΟΝ ΦΑΡΜΑΚΟΠΟΙΟ ΠΩΣ ΠΡΟΟΡΙΖΟΝΤΑΙ ΓΙΑ ΤΟΥΣ ΓΙΑΤΡΟΥΣ ΤΟΥ ΚΟΣΜΟΥ ΜΗΠΩΣ ΚΑΝΕΙ ΚΑΜΙΑ ΕΚΠΤΩΣΗ.
- ΑΠΟ ΤΑ ΠΑΡΑΚΑΤΩ ΦΑΡΜΑΚΑ ΓΙΝΟΝΤΑΙ ΔΕΚΤΑ ΑΚΟΜΑ ΚΑΙ ΑΥΤΑ ΠΟΥ ΕΧΟΥΝ ΠΕΡΙΘΩΡΙΟ ΛΗΞΗΣ ΛΙΓΩΝ ΗΜΕΡΩΝ -ΤΟ ΙΔΑΝΙΚΟ ΕΙΝΑΙ ΝΑ ΤΑ ΜΕΤΑΦΕΡΕΤΕ ΑΝ ΜΠΟΡΕΙΤΕ ΣΤΑ ΓΡΑΦΕΙΑ ΤΩΝ ΓΙΑΤΡΩΝ ΤΟΥ ΚΟΣΜΟΥ ΣΑΠΦΟΥΣ 12 ΑΘΗΝΑ. ΑΝ ΑΥΤΟ ΕΙΝΑΙ ΔΥΣΚΟΛΟ ΠΑΡΑΚΑΛΩ ΕΠΙΚΟΙΝΩΝΕΙΣΤΕ ΜΕ ΤΑ ΓΡΑΦΕΙΑ Η ΜΑΖΙ ΜΟΥ. ΤΗΛ 6937132999.
-ΕΙΝΑΙ ΣΗΜΑΝΤΙΚΟ ΝΑ ΜΕΙΝΕΤΕ ΠΙΣΤΟΙ ΣΤΗΝ ΑΚΟΛΟΥΘΗ ΛΙΣΤΑ. ΜΗΝ ΔΙΝΕΤΕ ΦΑΡΜΑΚΑ ΕΚΤΟΣ ΛΙΣΤΑΣ. ΔΗΜΙΟΥΡΓΕΙ ΜΕΓΑΛΟ ΠΡΟΒΛΗΜΑ ΣΤΗΝ ΟΜΑΛΗ ΛΕΙΤΟΥΡΓΙΑ ΤΟΥ ΦΑΡΜΑΚΕΙΟΥ ΛΟΓΩ ΕΛΛΕΙΨΗΣ ΕΘΕΛΟΝΤΩΝ.
- ΣΕ ΟΣΑ ΦΑΡΜΑΚΑ ΔΕΝ ΕΧΩ ΒΑΛΕΙ ΠΕΡΙΕΚΤΙΚΟΤΗΤΑ ΕΝΝΟΕΙΤΑΙ ΟΤΙ ΟΛΑ ΤΑ ΕΙΔΗ ΕΙΝΑΙ ΑΠΑΡΑΙΤΗΤΑ.
ΛΙΣΤΑ ΦΑΡΜΑΚΩΝ
Accupron 20 mg, Accuretic, Aerolin inhaler, Amoxil, Aprovel, arcoxia, Atorvastatin 20, Augmentin, Berovent inhaler
Brufen, Ceclor, Celebrex, Ciproxin, Co Aprovel, Co Diovan, Daflon, daonil, Depakine Chrono
depon, diamicron, Diovan, efexor, Eucreas, Flixotide inhaler, Glucophage
Klaricid, Laprazol, Legofer, lipitor, Lobivon, Lopresor 100mg, Meloxicam, Mesulid
Nexium, Normell, Norocin, Norvasc, Nozinan, olartan, olmetec, Omacor, Omeprazol, omnic tocas
Pancoran, Plavix (Clopidogrel), ponstan, Pradif tocas, Salospir 100mg, Seractil, seretide diskus
seropram, Seroquel 100 , 200, 300, 400 mg, Simvastatin 20mga, singulair 5+ 10 mg, solosa
Symbicort, Tenormin κυριως 100mg, Triatec, voltaren (Ολα εκτος ενεσιμο), Xozal, Zantac
Zinadol, Zirtek, Zodin, Zyprexa
Επιδεσμικο υλικο και γαζες
Ινσουλινες ολων των ειδων, κυριως Lantus Ολα τα αντιβηχικα σιροπια και χαπια Ολες τις κρεμες και αλοιφες.
Συριγγες ινσουλινης και γαζες fucidin
Για περισσότερες πληροφορίες:
Κανάκης Νικήτας,
Πρόεδρος των Γιατρών του Κόσμου
Τηλ:, 2103213150
info@mdmgreece.gr
The reason that Greece cannot meet its budget targets is that the policies imposed by the Troika have succeeded in shrinking the Greek economy and therefore its tax base. The IMF has repeatedly had to adjust downward its forecast for the Greek economy; it is now projecting a decline in GDP of five percent this year, as compared with a forecast of -3 percent just six months ago. When the first “bailout” package for Greece was negotiated in May of 2010, the country’s debt was about 115 percent of GDP; it is now projected to hit 189 percent of GDP next year. Clearly the Troika’s policies have had the opposite effect of their stated intention.
The world has barely dug out of recession and the global economy is again slowing dangerously. Most leaders seem eager to make things even worse.
Instead of looking for ways to reignite growth, Europe’s leaders — and Republicans on Capitol Hill — are determined to slash public spending. Europe’s fixation on austerity is also compounding its debt crisis, bringing the Continent even closer to the brink. Meanwhile, China’s government, which is struggling to contain inflation without letting its currency rise, has been trying to slow domestic demand, allowing its trade surplus to balloon.
Each of these policies is wrong. In combination, they are likely to tip the world into a deep recession.
The International Monetary Fund has cut its forecast for global growth this year to 4 percent, from the 4.3 percent it had forecast in April. It expects rich countries to grow by only 1.6 percent. That may be too optimistic.
The I.M.F. forecasts that the United States will grow by 1.5 percent this year and 1.9 percent in 2012. But that assumes Congress will continue payroll tax cuts and extended unemployment insurance, as President Obama has called for. Mark Zandi of Moody’s Economy.com warns that if Congress fails to do so, the country will probably slip into recession.
Europe is in even worse shape. Rich nations that could afford to spend more to increase growth, like Germany and Britain, are instead slashing spending. Germany and its rich neighbors are also insisting that Greece, Portugal and other debtor countries accept even stiffer doses of austerity to regain the confidence of investors. Sending these economies into near collapse means that they will never be able to dig out or pay off their creditors.
While the German Parliament is expected to approve a new $600 billion bailout fund on Thursday, many European leaders already admit it is too small to deal with turmoil that now also threatens Spain and Italy.
It is true that many countries do not have the money to pay for policies to promote employment and growth. The United States, Britain, Germany and China could boost global demand by spending more at home and buying more from weaker countries that cannot stimulate their own economies.
The United States government must cut its budget deficit, but the economy must recover first. According to Mr. Zandi, President Obama’s $450 billion jobs plan could add 1.9 million jobs in 2012 and cut the unemployment rate by a percentage point. With interest rates so low, the government could easily pay for a bigger program.
The British government has similar room to maneuver. And its stubborn insistence on fiscal austerity is already causing havoc. But the countries that could do most to assist global growth are China and Germany.
China today makes 14 percent of the world’s economic product but consumes only 6 percent of it. Allowing its currency to rise would help combat inflation by lowering the domestic price of imports, while increasing the spending power of the Chinese people.
Germany’s export model is also failing, producing little growth while sucking demand from its neighbors. Germany could easily raise money at low cost to stimulate its own consumption. Yet not only has it refused stimulus spending, it is imposing austerity on the rest of Europe — forcing weak countries to contract their economies in exchange for its aid.
Economic policy makers have made similar mistakes before. That is what caused the Great Depression. There is not a lot of time left to get this right.
"Ένα άλλο θέμα έχει να κάνει με την Ακαδημία από την οποία έχω παράπονο. Ήταν το πρώτο ίδρυμα που με τίμησε με το αριστείο των θετικών επιστημών το 1996. Στη συνέχεια μου πρότειναν να γίνω μέλος. Όμως οι ακαδημίες τις οποίες γνώριζα μέχρι τότε δεν πλήρωναν τα μέλη τους. Η θέση του μέλους είναι τιμητική. Ενώ εδώ τα μέλη της Ακαδημίας αμείβονται πολύ γενναιόδωρα. Η αμοιβή αυτή γεννάει και ορισμένες υποχρεώσεις. Εκείνη την εποχή μου έλεγαν ότι πρέπει να είμαι κάτοικος Αττικής κλπ Μάλιστα μου έφεραν το παράδειγμα του κου Ανδρόνικου που δεν μπορούσαν να κάνουν ακαδημαικό επειδή δεν ήταν κάτοικος Αττικης. Εγώ τότε ήμουν καθηγητής στο Πρίνστον και όπως καταλαβαίνετε δεν ήμουν κάτοικος Αθηνών. Μου πρότειναν να παραιτηθώ από τη θέση μου στο Πρίνστον. Εκείνη την εποχή πράγμα αδύνατον. Εκείνοι το εξέλαβαν ως υπεροψία εκ μέρους μου. Αργότερα είδα ότι έγιναν άλλοι ακαδημαικοί που δεν άφησαν τις θέσεις τους στο εξωτερικό και συν τοις άλλοις ανέλαβαν και σημαντικές θέσεις στο δημόσιο. Φωκάς καθηγητής στο Κέμπριτζ και ταυτόχρονα πρόεδρος της εθνικής βιβλιοθήκης. Νανόπουλος καθηγητής σε πανεπιστήμιο του Τέξας και πρόεδρος του εθνικού συμβουλίου τεχνολογίας και έρευνας
Ίσως δεν διαθέτω την απραίτητη ευελιξία στο να αντιληφθώ ποια είναι η ελληνική πραγματικότητα. Νόμιζα ότι αυτά που μου έλεγαν τα ενοούσαν. Δεν είχα συναντήσει ποτέ στο παρελθόν επιστήμονες να συμπεριφέρονται σαν πολιτικοί".
Is it possible to be both terrified and bored? That’s how I feel about the negotiations now under way over how to respond to Europe’s economic crisis, and I suspect other observers share the sentiment.
On one side, Europe’s situation is really, really scary: with countries that account for a third of the euro area’s economy now under speculative attack, the single currency’s very existence is being threatened — and a euro collapse could inflict vast damage on the world.
On the other side, European policy makers seem set to deliver more of the same. They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact — namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.
The story so far: The introduction of the euro in 1999 led to a vast boom in lending to Europe’s peripheral economies, because investors believed (wrongly) that the shared currency made Greek or Spanish debt just as safe as German debt. Contrary to what you often hear, this lending boom wasn’t mostly financing profligate government spending — Spain and Ireland actually ran budget surpluses on the eve of the crisis, and had low levels of debt. Instead, the inflows of money mainly fueled huge booms in private spending, especially on housing.
But when the lending boom abruptly ended, the result was both an economic and a fiscal crisis. Savage recessions drove down tax receipts, pushing budgets deep into the red; meanwhile, the cost of bank bailouts led to a sudden increase in public debt. And one result was a collapse of investor confidence in the peripheral nations’ bonds.
So now what? Europe’s answer has been to demand harsh fiscal austerity, especially sharp cuts in public spending, from troubled debtors, meanwhile providing stopgap financing until private-investor confidence returns. Can this strategy work?
Not for Greece, which actually was fiscally profligate during the good years, and owes more than it can plausibly repay. Probably not for Ireland and Portugal, which for different reasons also have heavy debt burdens. But given a favorable external environment — specifically, a strong overall European economy with moderate inflation — Spain, which even now has relatively low debt, and Italy, which has a high level of debt but surprisingly small deficits, could possibly pull it off.
Unfortunately, European policy makers seem determined to deny those debtors the environment they need.
Think of it this way: private demand in the debtor countries has plunged with the end of the debt-financed boom. Meanwhile, public-sector spending is also being sharply reduced by austerity programs. So where are jobs and growth supposed to come from? The answer has to be exports, mainly to other European countries.
But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.
Also, the debtor nations need to cut prices and costs relative to creditor countries like Germany, which wouldn’t be too hard if Germany had 3 or 4 percent inflation, allowing the debtors to gain ground simply by having low or zero inflation. But the European Central Bank has a deflationary bias — it made a terrible mistake by raising interest rates in 2008 just as the financial crisis was gathering strength, and showed that it has learned nothing by repeating that mistake this year.
As a result, the market now expects very low inflation in Germany — around 1 percent over the next five years — which implies significant deflation in the debtor nations. This will both deepen their slumps and increase the real burden of their debts, more or less ensuring that all rescue efforts will fail.
And I see no sign at all that European policy elites are ready to rethink their hard-money-and-austerity dogma.
Part of the problem may be that those policy elites have a selective historical memory. They love to talk about the German inflation of the early 1920s — a story that, as it happens, has no bearing on our current situation. Yet they almost never talk about a much more relevant example: the policies of Heinrich Brüning, Germany’s chancellor from 1930 to 1932, whose insistence on balancing budgets and preserving the gold standard made the Great Depression even worse in Germany than in the rest of Europe — setting the stage for you-know-what.
Now, I don’t expect anything that bad to happen in 21st-century Europe. But there is a very wide gap between what the euro needs to survive and what European leaders are willing to do, or even talk about doing. And given that gap, it’s hard to find reasons for optimism.Let’s say you wanted to start a new country, but you knew nothing about civil institutions, bureaucracy or history. All you cared about was creating an environment that was good for business, where budget discipline and trade agreements were the law of the land.
So, you spend a bundle of money hyping your Dreamstate to policymakers and the public proclaiming that your new creation will be the fast-track to peace and prosperity. Surprizingly, everyone loves the idea so much that they overlook the structural flaw at the heart of the design, that the loose confederation of states lacks a central government. The only thing that holds the countries together is a shared currency and budget restrictions. That’s it. But the corporate bigwigs and banker tycoons shrug off the problem because, well, because governments don’t really do anything anyway, do they? They just get in the way of big business.
That’s why you created a different model altogether, a model that puts a Central Bank at the center of the universe, surrounded by a scattering of eurocrats (financial ministers) who implement your diktats and sing your praises.
Then, one day, a fire breaks out on the perimeter and you start to panic. You run around in circles waving your hands and begging for help. But the other leaders balk at your request because they are still tied to their constituencies and run the risk of losing elections if they agree to pay for a fire that they didn’t start. After all, it was those “lazy Greeks” that started the fire. Let them pay for it.
So, now you have a big problem. Eurotopia is being reduced to rubble and no one can agree on a solution. And all the while, you keep thinking to yourself, “If I could just get the finance ministers to support a larger emergency fund and leverage the heck-out-of-it, then I could douse those flames pronto and get back to making money again.” It never occurs to you that your Corporate Frankenstate has no historic precedent and is built on a foundation of pure sand. You never think, “Maybe we need an executive, a congress, a judiciary, a bond market, and civil servants to execute our plans”.
Nah. That can’t be it, because government is bad. Banks are good, governments are bad, right?
And as you savor this morsel of wisdom, your Euro El Dorado burns to the ground.
The 17-member eurozone is in an irreversible spiral. The banks are hoarding capital, dollar funding is getting tighter, CDS spreads are widening, the ECB’s emergency loan program is soaring, and the gauges of market stress are blinking red. These are all the signs of a major credit cataclysm.
Now all of these problems could be resolved if there was a functioning government in place to put out the fire. But there isn’t. All there is is a bank, a gaggle of finance ministers, and a few worthless treaties. And, that’s why the eurozone is doomed.
And the moral is….?
Government matters.

MIKE WHITNEY
Disaster in the Eurozone
How close are we to disaster?
MT–We are getting closer to a disaster because of lack of political solution relating to the ongoing Greek crisis, and the contagion effect we are seeing building up in the peripherals but, mostly beacause Europe lacks a similar US TLGP program. So, because this mechanism is absent in the European space, continuous funding pressures, mean that banks, such as BNP Paribas and Societe Generale will be selling some assets to built capital cushions as you mentioned in your question 4. On top of that, you have a few major elections coming up in Europe (Spain in November, France presidential election in May next year, etc.), which are slowing down even more critical decision making.
MW–There are a lot of very smart people trying to figure out how the eurozone can get through this mess, but I don’t see how. The political obstacles appear to be insurmountable. What do you think will happen; will the eurozone muddle through this mess or is this the “end of the line”?
MT–It is not going to be a smooth ride for sure. I do not think it is the end of the line, end of the day if Germany decides to leave the euro they have too much to lose. They have been very big beneficiaries of the euro zone so far, although in Europe we are clearly staring at the abyss. The ball is in the political camp, but, given the politicial agendas showing up with upcoming elections, there is potential for the situation to turn nasty.
What markets hate most are uncertainties, we are going through a period of lasting volatility and heightened tensions. It did not have to be that way in the first place, but the can kicking game in Europe has been decisively played to maximum effect, for too long. Unfortunately for European politicians, it is decision time, make or break, and we can only watch and hope for a good outcome from the sidelines.
On Thursday Jean-Claude Trichet, the president of the European Central Bank or E.C.B. — Europe’s equivalent to Ben Bernanke — lost his sang-froid. In response to a question about whether the E.C.B. is becoming a “bad bank” thanks to its purchases of troubled nations’ debt, Mr. Trichet, his voice rising, insisted that his institution has performed “impeccably, impeccably!” as a guardian of price stability.
Indeed it has. And that’s why the euro is now at risk of collapse.
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.
And all indications are that European leaders are unwilling even to acknowledge the nature of that threat, let alone deal with it effectively.
I’ve complained a lot about the “fiscalization” of economic discourse here in America, the way in which a premature focus on budget deficits turned Washington’s attention away from the ongoing jobs disaster. But we’re not unique in that respect, and in fact the Europeans have been much, much worse.
Listen to many European leaders — especially, but by no means only, the Germans — and you’d think that their continent’s troubles are a simple morality tale of debt and punishment: Governments borrowed too much, now they’re paying the price, and fiscal austerity is the only answer.
Yet this story applies, if at all, to Greece and nobody else. Spain in particular had a budget surplus and low debt before the 2008 financial crisis; its fiscal record, one might say, was impeccable. And while it was hit hard by the collapse of its housing boom, it’s still a relatively low-debt country, and it’s hard to make the case that the underlying fiscal condition of Spain’s government is worse than that of, say, Britain’s government.
So why is Spain — along with Italy, which has higher debt but smaller deficits — in so much trouble? The answer is that these countries are facing something very much like a bank run, except that the run is on their governments rather than, or more accurately as well as, their financial institutions.
Here’s how such a run works: Investors, for whatever reason, fear that a country will default on its debt. This makes them unwilling to buy the country’s bonds, or at least not unless offered a very high interest rate. And the fact that the country must roll its debt over at high interest rates worsens its fiscal prospects, making default more likely, so that the crisis of confidence becomes a self-fulfilling prophecy. And as it does, it becomes a banking crisis as well, since a country’s banks are normally heavily invested in government debt.
Now, a country with its own currency, like Britain, can short-circuit this process: if necessary, the Bank of England can step in to buy government debt with newly created money. This might lead to inflation (although even that is doubtful when the economy is depressed), but inflation poses a much smaller threat to investors than outright default. Spain and Italy, however, have adopted the euro and no longer have their own currencies. As a result, the threat of a self-fulfilling crisis is very real — and interest rates on Spanish and Italian debt are more than twice the rate on British debt.
Which brings us back to the impeccable E.C.B.
What Mr. Trichet and his colleagues should be doing right now is buying up Spanish and Italian debt — that is, doing what these countries would be doing for themselves if they still had their own currencies. In fact, the E.C.B. started doing just that a few weeks ago, and produced a temporary respite for those nations. But the E.C.B. immediately found itself under severe pressure from the moralizers, who hate the idea of letting countries off the hook for their alleged fiscal sins. And the perception that the moralizers will block any further rescue actions has set off a renewed market panic.
Adding to the problem is the E.C.B.’s obsession with maintaining its “impeccable” record on price stability: at a time when Europe desperately needs a strong recovery, and modest inflation would actually be helpful, the bank has instead been tightening money, trying to head off inflation risks that exist only in its imagination.
And now it’s all coming to a head. We’re not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer.
So will the E.C.B. do what needs to be done — lend freely and cut rates? Or will European leaders remain too focused on punishing debtors to save themselves? The whole world is watching.
By Robert Scheer
For a decade, the main questions about 9/11 have gone unanswered while the alleged perpetrators who survived the attacks have never been publicly cross-examined as to their methods and motives. It is not conspiratorial but rather obviously plausible to suggest that they have been kept out of sight because legal due process, constitutionally guaranteed to even the most heinous of criminals, might provide information that our government would find embarrassing.
How little we know about the origins of the Sept. 11 attacks is laid out in the disclaimer on Page 146 of the official 9/11 presidential commission report. A box on that page states clearly that the conventional narrative of how those portentous events unfolded is based largely on the interrogation under torture of key witnesses who have never been permitted a single moment in a publicly observed court of law
We remain in ignorance as to what drove religious zealots formerly allied with the United States to turn against us, and what was the role of our ally, Saudi Arabia, the country of origin for most of the hijackers and their financing. Why in the aftermath of the attack did the United States embrace Pakistan, which was one of only three governments (Saudi Arabia and the United Arab Emirates were the others) to diplomatically recognize the Taliban and which turned out to be harboring the fugitive Osama bin Laden? And why did we instead invade Iraq, a nation known to be engaged in a deadly war with bin Laden and his al-Qaida?