Do it! Now!

Ambrose Evans-Pritchard again: Please Europe, either put up or break up. He explores possible scenarios for the resolution of the EUnion debt crisis. Here’s the one I like best:

Germany and its satellite economies withdraw immediately from EMU (let us say the Netherlands, Austria, Finland, Flanders and Luxembourg). This allows the South to enjoy a much-needed devaluation to restore competitiveness without going through a disastrous Fisherite debt deflation. Their contracts would remain in euros, so they would not need to default.

Temporary capital controls and some form of financial repression would obviously been needed for a few weeks. The German bloc would have to stand ready to recapitalize its banking system with €100bn perhaps (peanuts in the bigger picture) to offset the shock effect on sudden exchange losses on Club Med debt. (…)

Markets would very quickly see that the greatest impediments to recovery had been removed. We could rejoice, and breathe a little easier again. My guess is that stock markets would surge in Milan, Madrid and Paris, as occurred in London and Milan after the ERM crisis in 1992.

All I can say is: Do it! Do it now!

Advertisements
This entry was posted in economy, EUnion, the netherlands. Bookmark the permalink.

2 Responses to Do it! Now!

  1. Ferdy says:

    This kind of decisive action would mean we have decisive leaders. But we have not. The Chamberlains are still in office…

  2. Klein Verzet says:

    Well, maybe some gentle prodding will help. Like us posting this. Who knows?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s