unfortunately again there is a serious crisis developing within the big crisis (Spain) and again the author here hasn't got the time needed to reflect on more specific stuff like the correlation or struggle between German government and the Bundesbank for instance. Unfortunately also because the eurozone enters its next phase with serious risk of systemic failure, unfortunately foreseeable because the main 'actors' of the scene pose a systemic risk in themselves without nyone noticing or caring for that matter. The whole procedure of the demise of the European currency is a story of systematic denial , going even that far that some main players even denying that there is a crisis ! "Crisis of the Euro ? What crisis ? It's a success story .. just look at ultra low inflation figures, well within thee predefined limits !"
As always a bunch of things the author here reads almost on a daily basis reaches a critical mass sometimes and there is enough information to fill another blog post with some remarks. Remarks on the eurozone could actually need some 10-20 commentators nowadays, because of the sheer quantity of (unwanted) developments in this formally calm monetary area.To be honest the whole project was started as a kind of desperate act to prevent the eurozone to collapse , since the author here at least recognized the dangerous path it was on leading to the abyss. Simply by raising some level of awareness among the 'usual followers'. Fortunately the ECB at least had the courage to stop complete breakdown of the euro area, giving the other 'actors' in the drama the breathing space to take some necessary steps to prevent a repetition of events. So the ball was in the court of those politicians who created the whole thing with some serious flaws in its design (as we know now). It seems the effects of the double LTRO named 'Big Bertha' is coming to an abrupt ending, since once again the political leaders went to sleep yet again, instead of taking immediate and long overdue action.
The current crisis chapter is dominated by bad news from Spain, which was however not that surprising given the fact that the collapse of the real estate sector dragged down banks, confidence and perhaps ultimately the state, too. Once again events are dramatic enough in speed and scale that nothing short of brunt and large scale action can prevent a complete catastrophe. But this blog entry is not about the steps which are going to be taken by the EU without any doubt because there isn't currently much of an alternative in sight. It is more about the one way street the community of states holding the euro currency, but also others have taken. The one way street it seems to this author following more a map of insanity than reason and resulting in measures of 'there is no alternative' because the end of the road has been reached again and at that point there is indeed very little room for maneuver left.
So the final trigger of this blog entry was an op-ed article by esteemed journalist Florian Eder of the German newspaper 'Die Welt': Just spend the money, someone will pay where he states the basic flaw of current emergency measures:
"Es ist der falsche Weg. Eine Ausweitung der gemeinschaftlichen Haftung auf die spekulativen Geschäfte spanischer Banken und damit auf die Folge einer geplatzten Immobilienblase verringert die Verantwortung des Einzelnen. Sie verschleiert Verantwortlichkeit. Das ist das Grundübel der Krise ebenso wie der Versuch, Griechen, Italiener, Spaniern, Franzosen ihre Folgen weitgehend zu ersparen." engl.: "It is the wrong way. An extension of common liability of speculative deals of Spanish banks and with it of the results of a bursted real estate bubble reduces the responsibility of the individual. It disguises responsibility. That's the basic flaw of the crisis as is the attempt to save the Greeks, Italians, Spanish, French from their consequences."