On Tue, 9 Nov 2010 at 14:20:40 Doug Henwood wrote:
>
> On Nov 9, 2010, at 1:54 PM, Eric Beck wrote:
>
> > On Tue, Nov 9, 2010 at 1:22 AM, SA <s11131978 at gmail.com> wrote:
> >
> >> It seems to me that Ireland, like most of the peripheral countries, has no
> >> real way out except to exit the euro. (I read yesterday's article by
> >> whassisname, Morgan Kelley, your Dr. Doom?) If Ireland had the possibility
> >> of running its own monetary policy and devaluing, there would be more space
> >> for even center-left parties to challenge austerity.
> >
> > Hurrah for nationalist solutions and autarky!
>
> So what ideas do you have on the eurocrisis?
>
I'm in Europe at the moment. Some recent developments seem to be positive and negative. QE2 could help to postpone major liquidity issues in European debt.
Otherwise, Eurozone debt is looking shaky again. Counterparties are starting to hedge Italian sovereign risk. France's credit rating is looking iffy. Right now, debt from peripheral EMU countries is being sold, shunned or hedged by real money accounts after Angela Merkel announced haircuts may be applied to bondholders caught in post-2013 sovereign debt bailouts. Domestic interests (national governments, pension funds, etc.) could be forced to absorb future losses.
Some people think that this brinkmanship is leading toward a transformation of the EMU into a political union. This could be one way out of the crisis. However, today's financial markets have all sorts of trap doors of which politicians may not be aware...
M.