There is no free in liberty.


Tuesday, November 29, 2011

Even the Cheeleaders are Bilnking...


Cramer, here, describes the Euro credit crises in "terms that we can all understand".

Consider all these countries you hear about, Italy, Spain, Greece, Portugal now Belgium. Consider them like small retailers like my dad.They spent too much on their budgets, now they can't afford to pay their bills....  The banks are stuck with credit risks in the form of bonds and the countries can't afford to pay them back...
DefCon 3.

The Euro created economic linkages between fiscally unsound nations and generally sound nations that allowed credit markets to view unsound nations as if they were sound nations. The assumption has been that any national default within the EU would be absorbed in an effort to protect the Euro and hence any debt owed the sound nations denominated in Euros. Credit risk was spread.

Via the Euro Germany and France extended their credit worthiness to member EU nations; they acted in a very real sense as cosigners. Now they are absent cosigners, but who can blame them. Where a single default would have been fiscally possible if not politically possible, multiple defaults are neither.

So, if not for that pesky political hurdle of democracy in member nation, the EU could have taken advantage of what was once fiscally possible and regained its fiscal footing. Obviously the solution going forward is that member democratic nations should cede further sovereignty to non elected EU technocrats.

It seems that the people of Europe will either suffer from too much patriotism in the form of nationalism  or too little in the form of the EU.

Democracy is an elusive thing for some.


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