Stop Me Before I Vote Again

mark this up as

'the euro crisis update you didn't want '

http://www.project-syndicate.org/commentary/dos-and-don-ts-for-the-european-central-bank

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enter stage right
martin babbington feldstein of harvard university

always a man to interene in a big debate
Marty has a few words of advice for senor draghi et al
over at the European Central Bank

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the implication of recent remarks by head banker Draghi
males this crisis all seem like child's play

the ECB simply buys up as much of the outstanding stock
of CLUB MED SOVEREIGNS as necessary
till market rates are forced back into the sustainable range

but ...sez cuz martin ... ' tactic'-fully

this can never work ...not in the long run:
marty:

".. any central bank must be able to conduct open-market operations to manage liquidity in financial markets"

however

".. selective purchases of individual country bonds that bear high interest rates because of current and past fiscal profligacy is both unnecessary and dangerous."

yes that's clear enough isn't it ? so we really could stop there
and go off to other hot spot subjects

but doc martin has a counter proposal:

" A better rule for the ECB
would be to conduct open-market operations
by buying and selling a “neutral basket” of sovereign bonds,
with each country’s share in the basket determined by its share in the ECB’s capital."

that so far as i can see
gets simply stated and left hanging

"there now boys ..merlin has spoken ...so without a moment's hesitation
go out there and
do the right thing ."

my guess MF had space limits
but fom other remarks elsewhere i know he was thinking
about how the zone's elite might go about lowering the forex rate of the euro
to end its imbalances with the ROW

but we stray here .. back to the main topic

..no need really all's we get are restatements of the obvious
mission repeat the message over and over
arm chair agit prop style :

"holy moses clear thinking cub scouts
who in their right mind would want to
"....reduce pressure on the governments of...high-interest countries "

right NOW those pusilanimous compromisers need a stiffened spine not a bail out
they need "to make the politically difficult decisions ....
to cut long-term fiscal deficits...."

cut long-term fiscal deficits.... cut long-term fiscal deficits...... cut long-term fiscal deficits

cut cut cut .......deficits deficits deficits

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btw : there's a wonderously hideous passage in the middle
full of talk about past present and future "market signals"
both of the wrong and the right variety

which btw if one takes a step back suggests more questions then it answers

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we're done then paine ?

yes at least we should be ...but i can't bring myself to leave just yet

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there's so much more ....take marty 's grave warning
...if
the ECB follows the Draghi way
all the way
right up to the end of this crisis
then
" ...the ECB risks finding itself in the politically dangerous position
of deciding
whether a country’s fiscal actions are tough enough
to be rewarded with lower interest rates........"
which means :

"The ECB has crossed the threshold from doling out monetary policy
to doling out fiscal policy"

that last line there
is exactly why one must read every public messagefrom marty
...to get his particular brand of professor presto's
glue and gall sophistry
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from the back of the lecture hall:

" hey crome dome
are you claiming the ECB isn't NOW already
dictating member fiscal policy ?"

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i predict
in his diary tonite MF writes:

"okay i gotta admit the ecb right now is dancing behind a veil of indirection
but for god's sake that's gotta stay that way
dancing behind a veil is always smarter
if not always sexier then going full montee !"
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still can't stop myself .
.each time i think i'm done
marty pulls me back in ...

check out this upside down cake :

according the feldstein-think
far from the club Meds bolting the zone
the greater "risk" is a german bolt ! :

" Germany might not continue to accept the default risks implied
by large ECB purchases of high-risk sovereign bonds."

what ?
what risk "
and risk to who ?
and conveyed to them how ?
please mart-man please

do i nedd add
these follow up questions are not answered
or even asked

we do however get a nice bit of immediate misdirection however :

" Germany already faces large financial risks, owing to the ECB’s balance sheet and the Target2 balances at the Bundesbank that are generated by international flows of deposits to German commercial banks. "

ya ya
post bail there'd be a risk that net fund flows might head back toward club med banks

and in the light of that possible consequence
i can easily see why
a real full court club med bail
might not get the old "do it baby... do it " first take
out of
lots of german private bankers
bankers that are now happy bankers
on the receiving end of otherwise unwarranted net inflows
that would quickly become net outflows or back flows so to speak

but folks trust me
there are ways to make that work out as a win win many ways
remember
these same banks own lots of heavily discounted club med paper ....
get it ?
as in
"do dah woids 'sudden huge capital gain ' mean anything to ya ?"

---- if not then fuck just never mind.... forget it ...just trust me ..
.i prolly bankrupted more companies
in my career
then lots of you ever worked for---

here's the pay off:

" As the risks accumulate, ...
Germany might conclude
despite the potential impact on its exchange rate..

it would be better off returning to the Deutsche Mark"

note the passed thru caveat:

"despite the potential impact on its exchange rate"

catch that ? yup....
better a soaring revaluation ...better a sudden huge reduction
in international competitiveness
then all these zillions of day after day hauntings
by phantom default risks

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hour later at least

ps god is this a rich column

check out this zinger

"... ECB officials’ recent statements , by reversing the decline of the euro’s value,
may have blocked the market response that is needed to shrink current-account imbalances and boost GDP in the eurozone."

get it ?....germany could take a reval above but the entire zone can't cause the entire zone
needs a deval to crease international competitiveness

ya ya ya .... see world citizens the damn ECBrun euro corral f's
with every member nation's policy options
and gladly to
hell that was the point of it all
from day 1 !

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repeat after me :

there is no way
but the MNC way

the MNCs are our only Gods

and ECB is .....errrr ....one of their enforcer