The serious design faults of the Eurozone remain intact. The promised decoupling of the banking crisis from the debt crisis has been ditched. All moves toward debt mutualisation or for a central Eurozone budget have been suspended. The ECB’s bond purchasing program (OMT) remains in the sphere of the imagination, a purely phantom program whose announcement-effect cannot continue forever. Meanwhile, recession in the Eurozone's centre and depression in the periphery is eating away at the heart of Europe's social economy.He notes that Greek bond rates are down. But in the current situation, neither Greek banks nor the Greek government benefits from that:
The only beneficiaries are the hedge funds that purchased the 35 billions of GGBs that remain in play and are trading them with each other for speculative reasons. Meanwhile, Greece’s social economy is continuing to collapse, with a defunct banking sector ensuring a dearth of credit even for profitable firms, unemployment reaching world record levels, and aggregate demand that is continuing to shrink. In brief, the stabilisation of Greece's financial markets is in sharp contrast to the continuing tailspin of its social economy. [my emphasis]Greece is Exhibit #1 for the perversity of austerity policies during a depression and of the spectacularly bad European leadership of German Chancellor Angela Merkel.
Tags: angela merkel, austerity economics, eu, euro, european union, greece