Categories EMU Fiscal Policy Nick Crafts on debt and the ECB Post author By Kevin O’Rourke Post date December 13, 2013 9 Comments on Nick Crafts on debt and the ECB Here. Related ← ESRI Studies on Taxes and Transfers → Irish Debt Trio Eased the Way to Bailout Exit 9 replies on “Nick Crafts on debt and the ECB” Kevin, Do you think that the recent actions and musings of the dovish wing of the ECB and the virtual silence of the BUBA axis implies that the ECB is moving towards the views of the author? Of course it may take them too long to get from A to B and the EZ could have broken asunder by then. But is there emerging evidence that the lunatics no longer run the asylum? Kremlinology was never my forte Tull! But I guess there has been a shift since Draghi took over, and hopefully it will continue. As you suggest, there is an element of the slow bicycle race about the situation, and I’m not sure what the outcome will be. For a more pessimistic take, in which clever outsiders are absorbed, Borg-like, into the hive mind, see http://ecbwatchers.org/2013/12/11/pres-vsps-and-the-ecb-a-response-to-paul-krugman/ Debt never dies unless it is killed or repaid. In the absence of growth the logic of compound interest is dangerous. In the purest logic of the system spring follows the Untergang. Growth resumes from destruction. Better to destroy debt than start wars. A further article on a somewhat the similar theme. (H/t Eurointelligence) http://www.project-syndicate.org/commentary/yannos-papantoniou-warns-that-the-widening-economic-gap-between-the-eurozone-s-northern-and-souther-members-could-lead-to-the-monetary-union-s-collapse#pR41EfbMgf1gtQtA.99 The problem in terms of perception is how one judges cause and effect. One way would be to argue that the inadequacies in the euro’s design caused the collapse of the southern economies (including Ireland). However, an alternative would be to argue that structural and societal weaknesses in the then so-called “cohesion” countries made them incapable of coping with the disciplines required in a monetary union and that the fundamental error was to allow them to join in the first place (especially in the case of Greece). Exit is now no longer a viable choice. The approach of the EU is based on the latter analysis and, with the departure of Spain and Ireland from the isolation ward, the evidence is that it is working but at the cost of continued considerable pain in the impacted countries and anaemic growth across the EU generally. The European Council next week promises to be one of those meetings doomed to succeed as the leaders have boxed themselves into a corner ahead of the European elections next year and must come out proclaiming progress and unity. But there is absolutely no sign of any change in direction. The situation of Ireland has to be judged on its own merits. The logic that applies in the case of Greece and Portugal does not necessarily apply, a logic shared by the markets as Irish bond rates have unequivocally decoupled from not just these countries but also those of Italy and Spain. The narrative will also change accordingly (and seems to be already doing so). Keeping up the process of reform will be the biggest challenge. Because Kevin O’Donoghue can not be every where at once let me reply to DOCM’s reiteration of the neoliberal credo in the EU (that the lesser peoples living in countries not bordering Germany failed the great plan for EMU, and need corrective punishment, direct rule and reeducation) with the appropriate Brecht. After the uprising of the 17th of June The Secretary of the Writers’ Union Had leaflets distributed in the Stalinallee Stating that the people Had forfeited the confidence of the government And could win it back only By redoubled efforts. Would it not be easier In that case for the government To dissolve the people And elect another? Outside of the Europhile right the global consensus is that blaming the periphery for the failures of EMU is nothing more than excuse making for failed policies in which some national and class interests are more equal than others. How did we get a Europe where these evil clowns ended up in charge? Also appropriate to this thread. http://www.lse.ac.uk/newsAndMedia/news/archives/2013/12/TOUGH-CHOICES-FOR-A-TROUBLED-EURO.aspx As is this blog post by Gavyn Davies. http://blogs.ft.com/gavyndavies/ You wait for a bus and along come several at the same time. Interview Charlie/Rose Mark Carney posted by John Gallaher on another thread. http://www.bloomberg.com/video/boe-s-mark-carney-charlie-rose-12-10-JbioeO9TTwaSsnrFbsQ5Kw.html N.B. Relative experiences of US and Europe with regard to austerity (20 minutes in). Comments are closed.