From today’s Open Europe news summary:
1. Brussels proposes revamped €11bn aid package for Ukraine
2. The European Commission yesterday released its in-depth review into macroeconomic imbalances, in which it called for “policy action” on the German current account surplus, but accepted that steps were being taken.3. Greece seeking debt guarantees to aid return to market4. The ECB will hold its monthly meeting today with expectations split over whether the bank will take further action to fight low inflation. Recent stronger data, on inflation and economic activity, may potentially allow the ECB to avoid taking drastic action, according to the WSJ.5. Discussions between member states and MEPs are at a deadlock over the plans for a banking union and in particular the single bank resolution fund. Negotiations were called off last week but MEPs will present a compromise proposal to member states next week.
Europe is bankrupt, yet it will give eleven billion euros to a country that is not a member of the EU. Germany is criticized for producing goods that people want to buy and is willing to accept ever depreciating pieces of paper (actually ever depreciating TARGET2 credits at the ECB) in return. Greece wants to borrow even more from the credit markets using the rest of Europe as guarantors. The ECB is determined to debase the euro and not allow prices to fall, which would be a blessing to the average European citizen. And, finally, the EU is determined to socialize bank risk continent-wide, which will elevate moral hazard in order to further deplete Europe’s capital base.
The world is turned upside down.
Patrick Barron
