{"id":187678,"date":"2011-04-07T18:45:00","date_gmt":"2011-04-07T23:45:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2011\/04\/07\/someone-needs-to-open-up-a-can-of-whup-ass-on-the-krauts\/"},"modified":"2011-04-07T18:45:00","modified_gmt":"2011-04-07T23:45:00","slug":"someone-needs-to-open-up-a-can-of-whup-ass-on-the-krauts","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2011\/04\/07\/someone-needs-to-open-up-a-can-of-whup-ass-on-the-krauts\/","title":{"rendered":"Someone Needs to Open Up a Can of Whup Ass on the Krauts"},"content":{"rendered":"<p>The periphery in Europe is experience contracting GDP and a debt crisis.  The most recent case is that of Portugal, which is <a href=\"http:\/\/www.guardian.co.uk\/world\/2011\/apr\/07\/portugal-eu-bailout\">now asking for an EU bailout<\/a>.<\/p>\n<p>Unfortunately the conditions of the bailout are always the same Teutonic prescription:<\/p>\n<ul>\n<li>Austerity budgets, which hike taxes and cut spending.<\/li>\n<li>Paying off the banks that lent the money to the governments at 100\u00a2 on the dollar.<\/li>\n<\/ul>\n<p>The problem that this creates is:<\/p>\n<ul>\n<li>Social instability.<\/li>\n<li>Further GDP contraction, which increases debt load relative to the GDP.<\/li>\n<li>Declining tax revenues.<\/li>\n<\/ul>\n<p>The prescription for these problems is: <\/p>\n<ul>\n<li>Austerity budgets, which hike taxes and cut spending.<\/li>\n<li>Paying off the banks that lent the money to the governments at 100 \u00a2 on the dollar.<\/li>\n<\/ul>\n<p>Rinse, lather, repeat.<\/p>\n<p>The problem here is two-fold, and they are both of German origin:<\/p>\n<ul>\n<li>The Germans have never gotten over their bout with hyperinflation in the 1920s, and so feel that inflation is the <b>only<\/b> battle to fight.<\/li>\n<ul>\n<li>This also, at German insistence, got baked into both the Euro and the European Central Bank (ECB), which has no mandate to do anything by keep inflation low.&nbsp; Unlike the Fed it has no mission to minimize unemployment as well.<\/li>\n<\/ul>\n<li>There is a complete unwillingness by the EU and the ECB to allow for hearcuts on the bondholders, which (surprise) appear to largely be the German banks.<\/li>\n<\/ul>\n<p>This&nbsp; is why, on the basis of spiking commodity prices, driven largely by the Libya conflict, the <a href=\"http:\/\/www.nytimes.com\/2011\/04\/08\/business\/global\/08iht-rates08.html\">ECB has just raised its benchmark rate<\/a>.<\/p>\n<p>The thing here is that there is an awful lot of pain being inflicted to support German philosophy<sup>*<\/sup>, as well as supporting the bad debts of their banks, which would be insolvent by any realistic evaluation of this debt.<\/p>\n<p>When someone big enough<sup>\u2020<\/sup> finally tells the German banks to go pound sand, things should get interesting.<\/p>\n<p><sup>*<\/sup><span style=\"font-size: xx-small;\">Which, according to my physicist brother, is also why quantum mechanics such a pain, the the formative texts were written by Germans, who felt an obligation to be obscure and confusing.<\/span><br \/><sup>\u2020<\/sup><span style=\"font-size: xx-small;\">And I don&#8217;t mean Spain big.  If the new government in Ireland gives a 50\u00a2 haircut to the bond holders, the Germans will have a banking experience to rival our S&amp;L crisis of the 1980s.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The periphery in Europe is experience contracting GDP and a debt crisis. The most recent case is that of Portugal, which is now asking for an EU bailout. Unfortunately the conditions of the bailout are always the same Teutonic prescription: Austerity budgets, which hike taxes and cut spending. Paying off the banks that lent the &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1094,1078,984],"tags":[],"class_list":["post-187678","post","type-post","status-publish","format-standard","hentry","category-campaign-finance","category-disaster","category-europe"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/187678"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=187678"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/187678\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=187678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=187678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=187678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}