Krugman: Months, not Years (Eurodämmerung)

[cthulu2016]

Last edited Mon May 14, 2012, 02:48 PM - Edit history (1)

1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.

And we’re talking about months, not years, for this to play out.

http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/

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[ChairmanAgnostic]

1. Even the Deutsche voters rebelled against the austerity pogrom.

In the most populous state, they soundly rejected Merkel's party, causing some major league embarrassment to her, and possibly some serious structural problems in her government. At the very least, the people are VERY unhappy with the status quo, and Merkel has to reassess her pro-Koch and Nordquist policies.

The only reason the pressure is so high on Spain and Italy is precisely because Merkel is pushing so hard for austerity. There is zip public support in Greece, Italy, Spain, Portugal and other states for such austere and horrible policies. There will be an eventual consensus, but it will involve France and Germany bending, not the other countries.

[coalition_unwilling]

2. OT but appreciate your use of the umlaut. Makes me all

verklempt in my geneckdegezoink

[cthulu2016]

3. Cat and paste expands all of our abilities

I don't know the ASCII code for it, but fortunately it came along for the rife.