Even if Merkel was willing to give in on the idea, Finland and Austria wouldn't, and more importantly neither would the German supreme court.
Yet people keep wasting time debating the merits of it. It's like debating the merits of perpetual motion. No matter what the merits might be, perpetual motion is not going to happen, so there is no point in debating it.
Run on the Eurozone has Started
Eurointelligence proclaims Run on the Eurozone has Started
Jose Manuel Barroso warned yesterday the euro would be “difficult or impossible” to sustain without further economic integration. German newspapers this morning produced a whole string of poisonous comments about the European Commission’s proposals for Eurobonds. The eurozone is now in a position where crisis resolution requires a much firmer political commitment than member states had expected to provide.The idea is preposterous. There is no scope for a deal and no time for a deal even if there was scope. Moreover, and even if there was scope and time, it would require a German referendum and treaty changes by all 17 Eurozone countries.
German could accept Eurobonds under certain conditions
Taken at face value the German opposition against Eurobonds seems to be as strong as ever and most German papers such as Süddeutsche Zeitung and Handelsblatt report on the topic in these terms. Nevertheless, the resistance against the Commission is less categorical than it appears, Financial Times Deutschland writes. Angela Merkel did not rule out Eurobonds but rather said the timing of José Manuel Barroso’s proposal was “inappropriate”. Among the condition she enumerated were changes of the EU treaties and a much stronger commitment of member states to condolidate. Norbert Barthle, the budgetary spokesperson of Merkel’s CDU/CSU parliamentary group, told FTD: “We never say never. All we say is: no Eurobonds under current conditions”. As a result there is scope for a deal at the EU summit December 9.
Facts do not stop politicians or writers.
Hitler Enters the Equation
Writer Mark Schieritz in Nazi Adolf, inflation and the euro crisis blames the rise of Hitler on the gold standard and deflation.
The hyperinflation of the twenties led to so that the Weimar Republic was entirely prescribed a hard currency strategy - regardless of losses. Others were wiser because:The cause of the great depression was the runup in credit that preceded it. Blaming gold for the rise of Hitler or for the great depression is preposterous. Begging for inflation is equally preposterous.
After leaving the gold standard, the UK saw its unemployment rate decline by about a third from 1931 to 1933, while Germany's rose over the same period Significantly. If Germany had been willing to follow the UK in inflating, and its unemployment rate had followed a similar trajectory, it would have stood at 17% rather than 33%.
In other words, perhaps the greatest catastrophe in human history could have been prevented if the Germans had allowed a little more inflation.
The euro in its present form is in many ways comparable to the gold standard.
Economies go through these massive boom-bust cycles because of inflation, fractional reserve lending, and rampant credit expansion. The cure cannot be the same as the disease no matter how one tries to distort the facts with untenable correlations.
Central banks, governments, fiat currencies, and fractional reserve lending are responsible for every major economic bust in history and fools come back begging for more.
Enough! Eurobonds are not going to happen (nor should they happen).
For a detailed discussion of why Eurobonds and ECB printing are piss poor ideas, please see Understanding the Problem, Understanding the Solution, and Understanding Who is to Blame are Three Different Things.
I wrote that last evening but failed to post it. At the time US futures were up over 1%. Now I see they were flat. The reason? I presume this:
Merkel Reiterates the Obvious
Bloomberg reports European Stocks, Euro Fall on Merkel Comments
The euro weakened, Italian bonds declined and the cost of insuring European government against default rose to a record after German Chancellor Angela Merkel ruled out joint euro-area borrowing. European stocks fluctuated.No Hope or Future for Eurobonds
Euro bonds are “not needed and not appropriate,” Merkel said at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France.
“The market sees a ‘no’ and reacts to it,” said Martin Huefner, chief economist at Assenagon GmbH in Munich, which manages more than $4.7 billion of client assets. “We’re going to see a deterioration of equity markets in the coming months to the point where something will have to be done. The market would be euphoric to get euro bonds. Apparently the pressure is not big enough yet.”
Huefner has it backwards. The market hears "yes" and reacts to it, even when it is damn obvious the answer is no.
There is no hope or future for Eurobonds and there never was.
No matter how many times this is explained or reiterated, some eurocratic fool or some fool writer finds some lame excuse to attempt to revive the dead. The latest (yesterday) was preposterous analysis by the Financial Times suggesting Merkel did not "really" mean no. This was followed up with the ludicrous idea by Mark Schieritz who blamed gold and lack of inflation for the rise of Hitler.
Sheeesh.
Now that Eurobonds are finally dead (hopefully), can we please start a rational discussion as to how best to break up the Eurozone?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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