Europe's sweaty palms moment

I would argue that while the EU's problems are potentially much worse than those of Americas, there is greater scope for action while the intransigence of the Tea Party refusing to raise the debt ceiling could end the dollar's status as the global reserve currency and that really could be catastrophic for America. Hence sweaty palms rather than pooey pants

Sauce for goose is sauce for gander so here is an excellent article regarding Europe's debt problems. While the short term solution to the EU's problems aren't quite so simple as just raising an arbitrary cap on borrowing it would seem the self interest of German elites and to an extent German voters could badly harm the EU just as Tea Party self interest could badly harm the US.

The article also highlights the growing sense of lacking economic agency most citizens of Europe have. The flip side of the coin is the assertion of the elites and their lickspittles that essentially democracy works and thus it is everyone's fault and everyone has to face the consequences of that. The contrast of the self congratulation elites chorused when things were going well to this egalitarian approach to blame is probably the most crass case of "socialise the risk, privatise the reward" I have yet to see. Still the way things are going I doubt this is the most egregious case we're going to see.

One complaint I have about the article (and something I hope Tony will comment on) is that it fails to mention the nature of the Euro as a currency peg rather than an actual currency. There is no central control mechanism for borrowing (or at least there wasn't, I don't think this has changed but it might've) so countries like Greece could use the value of the Euro as imbued by big economies like France and Germany to borrow on much more favourable terms than their own economies would allow. That is to say Greece could borrow with Euros but was only able to pay back in (metaphorical) Drachma.

I really hope there is a reason other than cynical self interests that such a glaring oversight was made in the creation of the single currency.

Tony's Response
"For the most part you're correct, but it's important to note that while there is a single currency, the mechanism by which sovereign debt is accrued varies by state and unlike the US there isn't a single entity who can reign it in.

The question the Euro sought to answer was "can a unified currency work with a bunch of different entities essentially managing the back end?" As France and Germany will likely find out, they're going to be footing the bill for every country that doesn't have enough cash to meet its obligations. Either they do it or the currency itself gets weakened in ways that no one can really predict. Right now things aren't so bad, but if Italy goes or Spain, well, that's going to be the test because at a certain point the Germans aren't going to be able to keep up with large but faltering economies.

Within a country, sovereign wealth generally has to support the weaker, depressed parts of the country. That's just the way it has to be. In the Eurozone it's difficult to see how that's going to fly when the wealthier countries aren't responsible for and don't answer to the weaker countries but still have to act in a way that primarily funnels money to the countries that need it in order to support the entire system.

This is uncharted territory, really. There isn't any historical data on how this will play out to my knowledge, but my guess is that France and Germany won't be able to shoulder the burden for long and something will have to give either politically or economically. It's worth watching.

(FWIW Europe isn't worse off than the US economically, but the political realities involved will likely create a crisis in Europe before the US. The US has the benefit of simply being able to falter on it's own rather than having disparate parties who could precipitate collapse by actions that they might not be able to avoid. Europe's situation is definitely better overall when looking at the numbers and they're willing to address the actual balance sheet problems whereas the US simply never will, but the uncertainty over how Europe will play out makes it riskier now than it is in the US.)"

China continuing to ramp up soft conquest of Europe.

A good while ago I mentioned how China was taking advantage of Greece's current financial problems to to buy into the EU. Well that was just a contracted that was helpful to Greece's economy at a bad time. Now China is offering to buy up Greek debt especially in key areas of infrastructure that are of vital importance to Chinese export markets. Since Greece solving its' debt problem of vital importance for the whole of the EU this would give Beijing considerable leverage over the EU. The article mentions how this might cause the EU to be less critical of the current value of the Yuan. I agree but almost certainly not for the reasons the author meant. Interestingly this is quite similar to how the IMF and World Bank operate in service of US foreign policy.

As I said before, it is all smiles and kindness now but once they have that leverage China could well try to do some unpleasant things to the EU and more to the point disincline the EU from criticising far more unpleasant things China does to its' citizens and near neighbours.

Greek Journalist investigating corruption killed by professional hit team.

BBC give details here. The odd thing is that US news sources are blaming anti-government terrorist group "Sect of Revolutionaries" see here and here whereas the BBC and other British news sources state the Police don't think terrorists were involved. It would be a bit strange for "Sect of Revolutionaries" to kill this journalist because their core aims are stated to be fighting corruption.

Oddly those two I linked seem to be from the same source (most published news these days is just slightly altered news agency releases) and were updated longer ago than the BBC release. Its odd if the US is trying to tar left wing groups so blatantly but still, something to ponder on.

The only thing to do is to sell your property to those that robbed you.

So Greece is selling off some of its' six thousand Islands, its railways and its utilities. That the only people who are able to afford these things at the minute at the thieving bastards who profited from the current global financial crisis is, I'm sure, a complete coincidence and not a pre-planned cycle of self enrichment.

Any assertion Greece needs to sell these islands is disingenuous at best. Other countries such as Russia have defaulted on their loans within the past couple of decades and been fine shortly afterwards. The only people who really benefit from the money being paid back are the French and German banks who loaned this money to the previous Greek government (and helped them hide the debt). As William K Black says though, the best return on investment for the oligarchs is a political donation.

Chinese colonialisation of Europe begins

China buys into Greece

As we know from western investment in countries with financial problems and social unrest, the nice foreigners ever so kindly putting money into the country often have an agenda that doesn't benefit the investee at all! I sure hope this doesn't happen here, white people are involved.