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Sunday, May 09, 2010

Like Everybody Else

I'm waiting for the European press conference which is at 6 PM Brussels, or 12 PM US Eastern Standard.

Arab markets are open already, and aren't doing well. We're waiting for Godot. A very anxious weekend.

PS: If the ECB won't buy bonds and if the debt of some of these countries isn't going to be restructured, what good is any of this going to do?

Yeah, the richer governments can establish a fund to do it, but if the money they throw into that fund in the form of loans is going to be used to buy bonds which the private market believes will bust, then they are spreading debt across nations, which logically means that say, the German Bund goes down. And there aren't that many truly solvent European nations in the large economies. Both Italy and France have pretty high debt/GDP ratios.

You have got to believe that these will be rough elections for Merkel. The Germans are distraught, for good reason.

Update: I think this is a link that will show the conference.

I've seen commentary to the effect that this crisis is breaking the reflexive Europhile attitudes of the German public.

What the German public doesn't realize is that if they don't bail out the PIGS, they'll have to bail out the German banks instead.
John - I think the German population is coming to the uneasy awareness that bailing out the PIIGS is going to dump their banks anyway, and more and more of the population is beginning to think that the only way to stop the bleeding would be to form a smaller currency union with some of the more responsible northern states. That's just judging by forum discussions I have read.
Merkel's party did lost the regional election.
Ah yes, expected that. Although I wonder what the German voter will gain by switching back to the red-green coalition. Changing leadership isn't going to change unpalatable facts, and might worsen the policies taken in response to said facts.
The German and French banks are going to have to be bailed out one way or the other. At some point, it becomes reasonable to break the Euro, since chaos is going to break out anyway.

Paul Krugman actually does a reasonable job of explaining this:

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