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The League of the Willing Like-Minded

  06/24/12 11:59, by Len, Categories: Economics Commentary, Financial Markets, Financial Articles

Source - Article by Cees Bruggemans - 17th June 2012

Profile: Cees Bruggemans is Chief Economist of First National Bank.

Summary:

It has been a fantastic tale, the getting together, the eventual blow-up and the post-crisis world everyone is working towards. Not unlike everyday romances, divorces and post-everything bliss. It may sound like a Greek wedding, but it is more like a Germanic Opera, with a lot of yodeling drowning out all secondary noise, though one can faintly hear groans from the slave quarters and Greek tableware being thrashed. This odd romance called modern Europe has been thoroughly facebooked by now (Kohl and Mitterrand publicly holding hands and everything that followed). The wedding was also much covered (the announcement of Union, creation of the ECB and introduction of the Euro) and the post-nuptial happiness has been very intensely reported (a decade-long boom for some). How every bank and capital market participant suddenly thought peripherals to be the equivalent of German-quality risk overnight, pouring in money by the trill (not only figuratively), with easy money funding property, banking and welfare bubbles aplenty even as societal composition (the peripheral genes), higher inflation and less ability to generate productivity ensured a steady loss of trade competitiveness. With national and/or private debts out of control, all it needed was a big shock to have reality intrude. This the Anglo-Saxons did via a banking crisis and the Greatest Recession since the Depression. We also know by now what happened after this shock had detonated peripheral public debts beyond the pale.

There was no easy way back.

Read the full article here

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