EMU Archives - the patient investor

March 27, 2014

Andreas Dombret: What is going on in Europe? The view from within

From a speech by Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, at the New York Stock Exchange, New York, 26 March 2014:

How do we get to the end of the tunnel?

At the European level, the most important project is the banking union. The banking union is most certainly the biggest step since the introduction of the euro. And it is the most logical step to take. A single currency requires integrated financial markets and this includes the supervision of banks.

Consequently, one of the pillars the banking union rests upon is a Single Supervisory Mechanism – that is European bank supervision for the largest banks. Centralising supervisory powers in such a way can foster a comprehensive and unbiased view upon banks. It also enables policy action that is not held hostage by national interests. Thus, it will contribute to more effective supervision and better cross-border cooperation and coordination.

November 26, 2011

Euro Pressures Mount–Necessary for Eventual Resolution | Credit Writedowns

Germany is using this crisis to tighten its hegemony in Europe. It needs to close the fiscal loopholes. Many have recognized that this was a necessary birth defect in EMU–monetary union without fiscal union. A fiscal union–where countries, especially those that struggle to adhere to the Stability and Growth rule, have to cede a greater degree of fiscal autonomy. This will take the form not of German officials, but EU Commissioners having greater say in the fiscal policies of the debtors.

via Euro Pressures Mount–Necessary for Eventual Resolution | Credit Writedowns.

November 10, 2011

New Greek Premier Steps Into Spotlight – Bloomberg

Lucas Papademos, named today to be interim prime minister of Greece, steered the country into the euro region as central bank governor more than a decade ago. Now the former European Central Bank vice president will have to secure the country’s euro membership for a second time.

Papademos, who has never held elected office, helped foster economic growth rates that surpassed Germany’s and France’s in his eight years at Greece’s central bank before moving to the ECB in 2002.

via New Greek Premier Steps Into Spotlight – Bloomberg.

November 10, 2011

Watch Europe’s Bank Deposits, Not Its Political Moves – James Wood

People are now moving euro-denominated deposits out of Greece, Portugal and even Italy in protection against a possible exit of these countries from the European Monetary Union…….What is the effect of the movement of deposits? The banks losing their deposits will soon be facing a liquidity crisis. A publicly understood liquidity crisis leads to bank failures. In short, the focus on political considerations misses the looming problem of a liquidity crisis and bank failures.

via Watch Europe’s Bank Deposits, Not Its Political Moves – Seeking Alpha.

November 9, 2011

America and China must “crush” Germany into submission – Ambrose Evans-Pritchard

Having followed the German political scene closely for the last five months, it is clear to me that almost the entire German political establishment is out of its depth, ideological, sometimes smug, apt to view the EMU debt-crisis as a Calvinist morality tale, and lacking in deep understanding of what it has got itself into.

One can understand German worries about money printing – and especially the loss of fiscal sovereignty and democratic control – but matters have already moved on. It is too late for that.

via America and China must crush Germany into submission – Telegraph Blogs.

October 13, 2011

Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs

Mr Sulik (Slovakia’s speaker of parliament) is right. The EU-IMF rescue loans have not helped Greece pull out of its downward spiral. They have pushed the country further into bankruptcy. Greek public debt will rise from around 120pc of GDP to 160pc under the rescue programme, and the IMF is pencilling in figures above 180pc.

The rescue loans have rotated into the hands of creditor banks, life insurers, pension funds, and even a few hedge funds. ECB bond purchases have allowed to investors to dump their holdings at reduced loss, shifting the risk to EMU taxpayers. It is a racket for financial elites. A pickpocketing of taxpayers, including poor Slovak taxpayers.

“I’d rather be a pariah in Brussels than have to feel ashamed before my children,” he said.

via Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs.

September 28, 2011

Frau Merkel, it really is a euro crisis – Ambrose Evans-Pritchard

The reason this crisis keeps grinding ever deeper is because the euro itself is a machine for perpetual destruction. The currency is fundamentally warped and misaligned. It spans a 30pc gap in competitiveness between North and South. Intra-EMU current account deficits have become vast, chronic, and corrosive. Monetary Union is inherently poisonous.

The countries in trouble no longer have the policy tools — interest rates, QE, liquidity, and exchange rates — to lift themselves out of debt-deflation. Just as they had few tools to prevent a catastrophic credit bubble during the boom. Their travails were caused in great part by negative real interest rates set by the ECB (irresponsibly) for German needs.

via Frau Merkel, it really is a euro crisis – Telegraph Blogs.