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Economy
In reply to the discussion: STOCK MARKET WATCH, Friday, December 23, 2011. [View all]xchrom
(108,903 posts)26. the ecb's highwire act
http://www.nationofchange.org/ecb-s-high-wire-act-1324571646
At this point the sovereign debt crisis in Europe is almost getting boring. Weve seen the same script played out over and over with country after country. The basic story is the markets begin a run on the debt of a country: Greece, Ireland, Italy, Spain etc.
The troika, the European Central Bank (ECB), the European Union (EU), and the International Monetary Fund (IMF) then demand a series of austerity measures. In addition, they sometimes demand measures unrelated to fiscal policy, such as a lower minimum wage in Ireland or weaker employment protection legislation in Italy, that are intended to weaken workers bargaining power. As a quid pro quo, the troika then arranges enough bond purchases or other supports to get through the immediate crisis.
Of course these measures dont actually solve the underlying problem. If the troika took the steps needed to ensure that the indebted countries got past this crisis, it would lose the ability to demand further austerity and other steps that weaken welfare state supports for workers. The troika is not willing to give up its leverage at this point.
That is why the ECB repeatedly declares its refusal to guarantee support for sovereign debt any time it seems as though the financial markets believe that it is committed to supporting the debt of the troubled borrowers. This insistence by the ECB, coupled with the other policies it pushes to stifle growth, ensures that the crises will continue. The same countries will have to keep coming back for another dose of punishment and new countries will be added to the list as the contagion of slumping demand, deteriorating bank balance sheets, and dwindling confidence spreads.
At this point the sovereign debt crisis in Europe is almost getting boring. Weve seen the same script played out over and over with country after country. The basic story is the markets begin a run on the debt of a country: Greece, Ireland, Italy, Spain etc.
The troika, the European Central Bank (ECB), the European Union (EU), and the International Monetary Fund (IMF) then demand a series of austerity measures. In addition, they sometimes demand measures unrelated to fiscal policy, such as a lower minimum wage in Ireland or weaker employment protection legislation in Italy, that are intended to weaken workers bargaining power. As a quid pro quo, the troika then arranges enough bond purchases or other supports to get through the immediate crisis.
Of course these measures dont actually solve the underlying problem. If the troika took the steps needed to ensure that the indebted countries got past this crisis, it would lose the ability to demand further austerity and other steps that weaken welfare state supports for workers. The troika is not willing to give up its leverage at this point.
That is why the ECB repeatedly declares its refusal to guarantee support for sovereign debt any time it seems as though the financial markets believe that it is committed to supporting the debt of the troubled borrowers. This insistence by the ECB, coupled with the other policies it pushes to stifle growth, ensures that the crises will continue. The same countries will have to keep coming back for another dose of punishment and new countries will be added to the list as the contagion of slumping demand, deteriorating bank balance sheets, and dwindling confidence spreads.
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"the absence of democratically endorsed characters will allow austerity measures to proceed
dixiegrrrrl
Dec 2011
#52
Sir Mervyn King: debt crisis is causing a dangerous 'dependence on central banks'
Demeter
Dec 2011
#16
Legality of Non Transparent Transfer of MF Global Assets to JP Morgan Questioned
Demeter
Dec 2011
#20
FBI Reportedly Investigating Fannie Mae, Freddie Mac For Role In Subprime Crisis
Demeter
Dec 2011
#22
This is not about their "role in the subprime crisis," it is about execs lying to shareholders...
rfranklin
Dec 2011
#50
Rupee ends lower, falls for 3rd straight week {this is something to watch, apparently}
xchrom
Dec 2011
#29
Core Durable,Capital Goods Orders Miss Despite Inventory Stuffing, Push Q4 GDP Lower;Savings Down
Roland99
Dec 2011
#42
" It seems America’s bankers are tired of all the abuse. They’ve decided to speak out."
dixiegrrrrl
Dec 2011
#62