Monday, February 8, 2010


From Calculated Risk:

"Europe has become a huge game of chicken, whereby the Greeks are waiting for help from the outside and donors are waiting for Greece to take a step forward."
Mohamed El-Erian, Pimco, Feb 8, 2010

And from Simon Johnson:

Some financial market participants cling to the hope that the stronger eurozone countries, particularly Germany, will soon help out the weaker countries in a generous manner.   But this view completely misreads the situation.
The German authorities are happy to have the euro depreciate this far, and probably would not mind if it moves another 10-20 percent.  They are convinced that they must – in fact, should – export their way back to acceptable growth levels.
Competitive depreciation is of course a no-no in international policy circles.  But if your dissolute neighbors – with whom you happen to share a credit union – threaten to implode their debt rollovers, and makets react negatively, how can you be held responsible?
Germany and France have no objection to euro depreciation – they are confident that the European Central Bank can prevent this from turning into inflation.
It’s the US that should be concerned about the effect on its exports (and imports; goods from the eurozone become cheaper as the euro falls in value) if the euro moves too far and too fast.  But the US failed to raise the issue with sufficient force at the G7 finance ministers conclave in Canada and the course is now set – at least until Thursday.
The euro depreciates, the dollar strengthens, and our path to recovery starts to run more uphill.
And if these European troubles start to be reflected in difficulties for leading global banks over the next few days or weeks, the negative impact will be much greater.


Cartesian said...

There is not only economy which is a problem for the existence of Europe, but as well the moral foundations which in political theory are not acceptable in order to build something resistant. Here are some excerpts of Montesquieu and Tocqueville, I let you translate :) (thank you for this, I am rather good at translation, you can consult my blog in American language, but it is good to share the work sometime) :

Voici un extrait de "De l'esprit des lois" (livre 7, chapitre 8) : « Il y a tant d'imperfections attachées à la perte de la vertu dans les femmes, toute leur âme en est si fort dégradée, ce point principal ôté en fait tomber tant d'autres, que l'on peut regarder, dans un Etat populaire, l'incontinence publique comme le dernier des malheurs, et la certitude d'un changement dans la constitution.
Aussi les bons législateurs y ont-ils exigé des femmes une certaine gravité des moeurs..."

Voici une citation de Tocqueville dans « De la démocratie en Amérique » :
« Je suis convaincu que la situation (géographique) la plus heureuse et les meilleures lois ne peuvent maintenir une constitution en dépit des mœurs, tandis que celles-ci tirent encore parti des positions les plus défavorables et des plus mauvaises lois. L’importance des mœurs est une vérité commune à laquelle l’étude et l’expérience ramènent sans cesse. Il me semble que je la trouve placée dans mon esprit comme un point central ; je l’aperçois au bout de toutes mes idées. »

Cartesian said...

I did an effort for Montesquieu :

Here is an excerpt of “The Spirit of Laws” (book 7, chapter 8) : “There is so much imperfections linked to the loss of virtue in woman, all their soul is so strongly deteriorated from it , this principal point removed is making fall so much other ones, that one can consider, in a popular state, the public incontinence (sexual) as the worst woe, and the certitude of a change in the constitution.
Also the good legislators have asked to the women in these states a certain gravity of morals…”

Unknown said...

Gee, I can't remember! How much did the Dollar depreciate against the Euro since 2003?