Stood waiting for Sir Richard Strahan                                                                                                                    

 Sir Richard, longing to be at 'em     

Stood  waiting for the Earl of Chatham

An 18^th century verse on a battle which didn’t occur when it was supposed to as each  of the two British commanders waited for the other to make the first move.

Roy Jenkins quoted it to Prime Minister Callaghan in hopes of  persuading him  Britain should join the common currency.

 Callaghan thought  there should  be a common budget  before there could be a common currency  Jenkins thought that was like Sir Richard waiting for Chatham.

They’re two weeks old, but Martin Wolf’s impeccably logical Sept 11 FT column and George Soros’ article in the NYR dated Sept 27 in separate ways seem to prove Callaghan right.

Not a hot dagblog topic but for those who are interested…….

Soros

“in the aftermath of Lehman Brothers….Merkel declared that the guarantee that no other...institution would be allowed to fail should be given by each country acting separately. That was the first step in a process…..now threatening to destroy the European Union.

If took financial markets more than a year to realize the implications

{Flavius: that  inevitably there would be a small country forced to bail out a large bank and in the process  would destroy its own credit so its "sovereign debt-held by banks all over the world would drop in value}

Maastricht took it for granted that only the public sector can produce chronic deficits…Although these assumptions have been refuted by 2008, Europeans...continue to abide by them….Consequently the words of Maastricht were treated as if they were cast in stone including the article which forbids the ECB to lend money to governments……

The Bundesbank is determined to limit the losses it would incur in a break up. This is …a self-fulfilling prophecy.

Imperial power can bring great benefits but it must be earned by looking after those who live under its aegis.

The best alternative would be for Germany to undergo a change of heart….Until the June summit I was hoping (that they would. But now) a change seems unrealistic.

The next best alternative is an orderly divorce. If a debtor country leaves …it would be forced to default on its debt

    {Flavius:Which would wipe out the banks holding it }

   (whereas)…if Germany were to leave , the euro would depreciate…Practically all the problems would dissolve….the Eurozone ,even without Germany, would score better on indicators of…fiscal solvency than Britain,Japan or the US.”

In short the current situation is like a nightmare that can only be escaped by waking up Germany."

Wolf

“…decision by the European Central Bank to (purchase) government bonds …against the opposition of the Bundesbank….. was…..too little too late

.Draghi argued...there is a case for intervening……….. to break expectations.Yet the ECB will …….intervene ..only if the countries meet specific conditions (which)militate against the …new program. The ECB ….will seek to eliminate the threat of a break up except when the threat is most real …when the country is failing to meet conditions. …Investors know that electorates might choose a government that (won’t stick to) agreed conditions……then?   either the ECB stops buying (and)...the bond market implodes, or the ECB continues (and) conditionality is jettisoned.

This ..seems more likely..But that …might have dire consequences…….swathes of German opinion hate what is happening to their money …….imagine what would happen….if a country started to backslide while the ECB went on buying.

In brief a conditional program of bond purchases ,…against the opposition of the Bundesbank …cannot make the Eurozone ….irrereversible.

{Flavius: translation of the above: To save the Euro Draghi acted against the wishes of the Bundesbank which is  what’s inevitably going to destroy the Euro because having been outvoted over Draghi's plan to buy sovereign bonds the Bundesbank will insist  the ECB live up to Draghi's commitment to cease supporting any country which fails to honor the terms of the ECB support and democracy will soon produce a government elected on a platform of doing exactly that}

Flavius

Soros reminded us that the Euro crisis was predictable-altho not predicted- a year in advance. Wolf describes a likely  scenario because of which it's equally predictable -altho not being predicted ,Spanish yields dropped yesterday-that Draghi's attempt will fail and the Eurozone will not be able to continue as it is.

Unless Germany bites the bullet and withdraws voluntarily in an "orderly divorce"

If you’re keeping some euros for your future vacation perhaps you should cash them in  soon..

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