Since the US Treasury can borrow money at 2.43%, and the Greeks, Italians, and Irish are suffering because of bond rates at about 6%, why doesn’t the Treasury borrow as much as it can at the current rate and buy Euro-bonds at 3.5%. The Euro-economies get a break, and the US scores 1%/year.
Oh, I’m sorry, I forgot that only Wall Street is allowed to make money with other peoples’ assets.
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3 comments
Not being an actual capitalist, like I am, I understand your deluded corporatist viewpoint, but when you look at the fundamentals and the problems, the three countries can all climb out their holes and pay their bills so long as they are not saddled with the moronic, central-planning requirement of austerity that was imposed upon them. In order to get the money they need to bail out French and German banks, they are being required to do things that make repayment nearly impossible. If they weren’t saddled with austerity measures there are proven ways of dealing with their problems.
I was thinking, who benefits from the Greeks, Italians, and Irish being forced into default? Then I realized: The Germans. Bear with me. German public debt is pretty high — around 80% of GDP — but the notion of Germany defaulting on that debt is ludicrous. So, if the Greeks, Italians, and Irish are forced to default, where is the money that was going into their sovereign debt going to go? Yes, into GERMAN sovereign debt! Thereby driving down Germany’s borrowing costs for its sovereign debt. Happy happy happy for Germany. Not so happy for the nations driven into default, but (shrug). Merkel got elected by Germans, not by Irish or Italians or Greeks.
Which explains, Duffer, why the ECB isn’t doing what a central banker is *supposed* to do when so-called “bond vigilantes” come calling (i.e., buy up sovereign debt in quantity using either reserves or freshly-printed money to drive the interest rates on said debt right back down), and instead is doing their best to make sure that the “bond vigilantes” drive those nations into insolvency and default. The ECB is dominated by German bankers due to the fact that at the founding of the Eurozone, the German economy was roughly half of the Eurozone’s GDP. Those German bankers are doing what’s best for Germany, not what’s best for the Eurozone. Enough said.
— Badtux the Economics Penguin
Actually, Mr. Duff, I would buy because it is a growth opportunity in a flat market. Capitalism is about risk. Risk is the justification for profit. If you don’t take risks, you don’t deserve to make any money. You have spent too much time in a corporatist environment to understand capitalism.
Yes, Badtux, it is the German banks backed by the French who are orchestrating this mess for their own benefit. The southern European governments and Ireland should never have gone along with the austerity packages, and the ECB would have had to act.