Death Star Economics



For and against the banking union

There won’t be a news brief on Wednesday and Thursday, June 13 & 14, 2012.

While WSJ MarketBeat says all eyes turn to Greece after the Spanish failout, Alphaville says Italy is the center of attention now. The case for the former is the little anticipation of the mess that will undoubtedly result from Sunday’s elections; the case for the latter is Italy’s rising bond yields (and Austria’s finance minister saying Italy needs a bailout).

Or maybe, the attention will be shifting to Cyprus, which may be the fifth European country to receive a bailout. Coincidentally, Cyprus is up for the rotating EU presidency in July. A little bit awkward… read article

Jose Manuel Barroso, president of the European Commission (who looks like he is rapping on the article picture), is pushing for the banking union, the Bundesbank remains steadily against it unless the fiscal pact is fully enforced. Barroso says the banking union would be that one necessary bold move that the world has been waiting for. The Bundesbank, on the other hand, says that if you agree to carry the burden of a liability that is not strictly speaking your responsibility, you deserve to have a say in how said liability is managed. So really this is about security. The Bundesbank is aware that the peripheral problem children would benefit from a banking union without the fiscal pact. Of course they would. It’s like free money. But what is Germany getting out of it? Not paying for all the bailouts more or less by itself maybe, but at least that leaves the element of control. read article

Here’s a more convincing case for the banking union. Here’s a more convincing case that nothing will come of it.

And then there is the capital controls thing… Apparently, someone who couldn’t keep his mouth shut, told the press that the EU is working on plans for capital controls, limited cash withdrawal and a temporary suspension of the Schengen agreement, should Greece decide to leave the euro (hello, Bretton Woods). Yet, so the sources, nobody in Brussels actually believes that it will come to this. Sorry, no, that doesn’t make me feel better. read article

So long.


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One Response

  1. princess1960 says:

    thank you for the post .allways intristing .. About union banking this is one idea looks me Marxi’st ideaology but my question is what role will play ECB ?
    -SPAIN is fininsh ..allredy
    -ITALY is next ,QY, SLOV ,BELG
    -GR .is dead if is out or inside (rich is more rich poor is more poore.. IF the future of EUZ
    is to have 90% poor people she did… is desapire middle class ..don’t some leader there see that? or YES

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