Death Star Economics



Don’t buy Facebook, buy eurobonds… oh no wait…

Yesterday, the pro-eurobond club counted Mario Monti, Mariano Rajoy, Jose Barosso, Francois Hollande and Barack Obama (sort of). Today, the OECD joins in with the choir and Angela Merkel is probably having a bad day. Thilo Sarrazin, ex-board member of the German central bank, just came forward with a new book in which he discusses why the euro is unnecessary and compares eurobonds to holocaust reparations. (German article here)

The statements that have been made regarding the issue, mostly by unnamed officials, show the misalignment of interests of the EU and Germany. The former says an agreement on eurobonds is under way, the latter says Germany will never agree to them. The bottom line: at least one of them is wrong. My guess is that it’s the latter,peer pressure is a powerful thing. But we shall see what happens tomorrow at the summit…

Otherwise, there is a truckload of OECD forecast data today, cutting expected eurozone GDP growth in 2012 from 0.2% to -0.1%, before growing 0.9% in 2013. Generally, 2013 seems to be the benchmark for when things get better again. I feel like that’s what we expected form 2010 as well. And 2011. Hmmm. read article

Facebook’s share price fell 11% yesterday: many consider it an embarrassing failure, some call it an optimally priced IPO. read article

Here’s a post on Crossing Wall Street about how $33 per share would have been a more accurate valuation for the company from the start. Wise words:

So now that Facebook is public,is the stock good buy? 

The short answer is no. The longer answer is noooooooo.

Right. So we got that settled.

The FT reports “secret” financial aid to Greece, facilitated by the ECB and paid out by the Greek Central Bank in form of ELA: emergency liquidity assistance. It’s what kept Ireland’s banks afloat back in the day, and about €100bn worth of it have been pumped into the Greek banking system.  Nouriel Roubini calls the ELA “the Trojan Horse for the eventual creation of the new drachma.” The problem: the ECB has the power to decide the terms and also termination of ELA. Last week, you may remember, the ECB suspended liquidity aid for four unnamed Greek banks, which makes them dependent on ELA. The (FT’s) bottom line: the ECB could nudge Greece out of the euro just like that.

Also, it’s time to look at the OECD’s better life index again, if only because it’s really pretty. Ordering the countries byhighest degree of work-life-balance, it’s a bit confusing that Spain ranks on the third, Greece on the eighth and Portugal the eleventh place… How do you evaluate the work-life balance in a country with more than 20% unemployment?

So long.


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