Euro Area Cross-Border Financial Flows

The February ECB Monthly Bulletin has several interesting articles. In addition to the article on cross-border financial flows, Money and credit growth after economic and financial crises – a historical global perspective and Corporate indebtedness in the euro area

9 replies on “Euro Area Cross-Border Financial Flows”

Financial Flows 2002-2008 ………….

Jeez – all those dealers must have been doin a sthone of 95% pure crack-cocaine a day …. at least!

And fools such as ourselves are now expected to pay for all this insanity!

You can take the monetarist quantity theory of money too far , quality is a manifestation of success also.
But the Euro was a creature of the 80s & 90s after all – a loads of money era.
I can’t for the life of me think of one lasting structure built during the euro years.
It was all Junk in and Junk out.
Irish Bog housing estates , Spannish holiday homes from Hell , more & more cars burning fuel for no improvement in long term wealth.
Pointless , a pointless currency.

“As long as the euro provided benefits in the form of cheap credit, it was made use of. The credit never produced goods of any value, nothing that would allow a user to weather a euro-generated storm. The euro is monetary crack, it never did any country any good, not even Germany.

The product of the euro are excess houses in Spain and Ireland, some consumer sales in Greece and elsewhere, some extra car sales for Germany. The benefit was an abstraction, an airy advertisement of ‘European unity’. What actually arrived was an inflexible bureaucracy in Brussels and a horror-show from Berlin. The crack high is now gone with the wind. EU policy has become a mixed bag of bullying, threats and rear-guard actions. Nobody speaks of a grand European future under the euro anymore. The talk is of how to escape the onrushing euro-amplified depression. The euro politicians are to be thrown under the wheels. The inept Merkel will go, so will mafia-man Schäuble. The new German government will throw money down the bottomless German pit … if the euro lasts long enough for the Germans to elect a new government.

The technocrats and euro-enablers have failed. Nobody in the European establishment appears to grasp the ongoing economic unraveling is permanent. There will not be any growth. The fuel constraints mean an ongoing recession. The old measures of prosperity — carefree waste behind the wheel of a new car — are now obsolete”

Steve from Virgina

The Market Ticker cuts to the quick……

“If there was ever a casus belli, it’s here:

(Financial Times) — The battle of wills between Athens and its eurozone lenders has intensified, with Greece’s finance minister accusing “forces in Europe” of pushing his country out of the euro while his German counterpart suggested postponing Greek elections and installing a new government without political parties.


Um, the people making the “suggestion” are not Greek. This is tantamount to calling for the taking over a nation’s government by force, which is the very definition of an act of war.

Here’s hoping that the Greeks have remembered where the tubular steel and lead were stashed, and that the Germans who are making such threats immediately and publicly retract them as under any reasonable interpretation those sorts of demands amount to a declaration of war and are inviting what typically comes in response to same.”

Dork – No talk of this withen the domestic executive halls of power ? / its merely theatre but is of much symbolic significance.
The Germans – the fools are being used by their bankers whispering sweet nothings into their big backwood conifer ears.

Its to be expected anyhow – when our local Friendly Gov can be given the power to turn water into wine or credit money into base money without fear of executive sanction or in the words of Brian Lucey “The Irish voice on the ECB is not answerable to either this committee nor any organ of government, which is right and proper”

The Euro is a abomination – it needs to be aborted as it gives not only monetory power to the cartel but executive power as well – their appetites cannot be satisfied under such a asymmetrical power structure.

The market state power framework gets the populace on the hook for bank credit with absolutlely no input into policey.
A joke on one level but the ultimate expression of the now terminal market state condition we find ourselfs in.
Wether it was a illusion or not the nation state was a expression of shared power between the executive & the bankers.
But this – this is a Cretin Child of Europa – a product of that nation state incest.

I note that some are remarking that there are few comments on this thread. Generally I think this is because of the complexity of the issues many charts. The ECB paper makes difficult reading.

But a read of [BOX 1] tells you how far removed from reality the ECB still is.
Four reasons why cross border financil integration is beneficial.
Reason number one: Wait for it.

“First, cross-border holdings of assets and liabilities allow economies to share the risk associated with their individual domestic business cycles.2 By enabling a country to borrow during economic downturns and to lend in economic upturns, financial openness enhances consumption and income
risk-sharing, while reducing the volatility of consumption growth. This counter-cyclical effect of global capital markets on real variables is particularly important, given that shocks tend to be temporary or idiosyncratic. Besides, improved risk-sharing, in turn, enhances the ability of countries to specialise in their most productive sectors, leading to increased economic efficiency.3”

It this humour, irony or just ridicule?

On the above. Have the ECB authors studied what is happened and is happening in Greece, Portugal, Ireland, Italy, Romania, Slovenia etc etc.
Have they read the fiscal compact that the ECB is pushing throughout Europe.

As John McEnroe used to say “You cannot be serious”.


Don’t give up. You are providing a valuable public service. I know we do not always agree but I would not bother reading this blog if I did not think I could learn something from it.

Maybe you should consider a (thick) skin graft. Modern medicine can do miracles these days.

The paper does not go back far enough to describe whats happening – at least to Ireland & Great Britain.
This is equivalent to the post Napoleonic depression.
What makes this worse then even that Massive split in Commercial activity is that war debt was eventually rendered insignificant by the Industrial revolutions increased energy intensity.

We have declining energy levels going forward as they used to say in Ireland Inc.

And they wonder why credit is not returning ?
Credit is simply the monetory mechanism of taking energy from the future.
Today’s money & not tomorrow’s credit needs to spent on increasing the energy density.

I agree that this board provides a valuable public service, and I am a bit surprised at the lack of comment on the thread.

The ECB Bulletin seems to little more than a trade magazine for bankers, if the paper on financial flows is any indicator. It’s a po-faced attempt to disguise the casino-like nature of the financial sector, culminating in the Big Lie;

‘‘Balanced and sustainable macroeconomic policies are a prerequisite if countries are to reap the benefits of global financial integration, as they enable countries to attract stable and balanced capital inflows, which are conducive to the long-run growth of the economy’

This is preceded by such gems as:

‘Financial flows driven by volatile factors such as herding behaviour among investors or the so-called “hunt for yield” can, in an environment of increased risk appetite, lead to a mispricing of financial assets, with the associated risk of sudden adjustments, giving rise to painful consequences for the real economy.

The problem is not ‘herdlike behaviour’, but the regulatory changes which permitted humungous perverse incentives to be established for bank CEOs. The Black-Scholes based mispricing of risk was the biggest scam ever perpetuated on the planet.

Anyone reading Bhide’s recent ‘A Call for Judgement’ can be left in no doubt as to the precise nature of the political, accounting, and regulatory mechanisms involved. William K Black on ‘Control Fraud’ is an audio podcast worth hearing.

The following comment is interesting. This is what FDI investment indicates about Ireland’s real (as opposed to putative) economic ranking. The Atlas of Economic Complexity forgot this bit.

‘Second, investors from advanced economies often prefer direct investment – granting immediate ownership and control over a firm to portfolio investment in emerging economies, which tend to have less deep financial markets and a less developed institutional framework, with poorer public and corporate governance. In addition, foreign direct investment often forms part of the market penetration strategies of large multinational firms with headquarters in advanced economies’

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