120 billion dollar bash

End of the Euro? It does seem that three is a crowd. And with the Euro, The American dollar and China as a nimble but nonetheless elephant in the room, it may be the Euro will slowly be dismembered and sold off piecemeal, perhaps some regional Euros with Germany playing nominated policeman. After all, they have had nineteen meetings previous and the basic template of austerity and luxury goods flowing out of the north and debts in the south, while both enjoyed a comfy complicity in this form of subsidized cookie to industrial powers and the easy to blame targets of the stereotypical southerner, the game, or charade may be coming to a close. Most of the “new” money has already been promised, and although there is momentum for a TARP like activity with direct lending to the banks, a Euro collapse, orderly to be sure, may be the aim, ultimately.

“It’s alive!” said Henry Frankenstein. It was said in alternating tones of fear and delight, as he gazed at his newly finished flesh collage. So with the Euro….a kind of mechanical creation that lived, this product of modernism, that the Euro is, characterized as modernism is, by a disrupted momentum, one that simultaneously breaks with tradition and feeds of it. It may have been found to implode from its inception. As Kafka once said, Modernism means that some things can no longer be done…

—”They underperformed my low expectations,” said Megan Greene, director of European economies at Roubini Global Economics, assessing what the leaders have announced so far. The growth package “will help at the margins. It will make the recession less deep. But it won’t create growth.”—Read More:http://www.statesman.com/business/european-leaders-agree-to-limited-growth-package-2406310.html?printArticle=y image:NYT

At best then the Euro may have been a  diversions. Like a piece of art, the Euro was neither work , nor thought, but merely some kind of pastime, an activity. Its creators and users were not really motivated in that it would strengthen the European body, ridding it of its cultural illnesses, read antipathy and even hatred of its member parts, and leveling the playing field for all;perhaps the Euro was fundamentally an artistic and contemplative activity. ….

—The agreement of a growth pact would represent a political victory for French President Francois Hollande who pushed the issue during his election campaign. He argued the growth pact was needed to offset a fiscal compact agreed in January which ratcheted up further austerity policies in Europe.
Still, despite the big headline numbers, the pact seems to provide little new real money and relies on ideas that have been circulating for some time about how to better deploy the EIB and EU budget funds. Many EU officials have said they don’t expect the policies to produce a significant change in the economic outlook.
The draft also said that European Council President Herman Van Rompuy would be asked to report back in October and finalize by year-end his report, released Tuesday, on ideas for deepening integration within the euro zone.—( Dow Jones) image:http://thepostperspective.wordpress.com/2011/12/07/20/

…The same could be said of all activities and games. Its a drama requiring artistic tension. Such as these Euro meeting produce. The object is not really to solve the problems, get to the root of the debt crisis, and raise those laggard southerners by the bootstraps, “all for one and one for all”, but instead to be engaged in the alternating fortunes of the countries participating. To see the Germans smash the beejesus out of Portugal or Greece is of no delight, even to Germans. We want to savor the moments, and have the fortune swing repeatedly and dramatically within a larger context of saving the Euro. If we didn’t enjoy the suspense the problem would already be solved…

( see link at end) …Do you think some word of this leaked out to the markets? Aren’t some of those fellows Goldman alums? lol

The financiers and politicians do like to make a ‘splash’ especially when they have nothing real to say. And it does provide a nice excuse for the end of quarte

ock market charade.

To put the amount in context, the Spanish banks alone need that entire amount to remain solvent.

So far it looks like nothing of great significance and the stock futures are lackluster in their reception. It is more of a ‘stimulus plan’ and a collection of things already on the table.

Kicking the can…

The equity futures are not impressed.Read More:http://jessescrossroadscafe.blogspot.ca/

—Many believe Germany’s austerity plan will ultimately fail in Europe. Mark Blyth, a professor of international political economy at Brown University, tells NPR’s Raz that austerity hasn’t worked at all and that it was quite predictable that it wouldn’t work.
“You can’t cure debt with more debt,” Blyth says. “If everyone tries to pay back the debt all at the —Read More:http://www.npr.org/2012/05/13/152627865/eus-financial-crisis-doesnt-end-at-nations-borders

(see link at end):The German parliament has voted overwhelmingly in favor of the European Union’s 120-billion-euro growth pact and European Stability Mechanism (ESM), signaling a determination to overcome the European financial crisis.

German Chancellor Angela Merkel rushed back to Berlin following EU summit talks in Brussels in order to address the legislative body before it closed for its summer recess on Friday.

She encouraged lawmakers to approve Europe’s fiscal pact on budget discipline, as well as a permanent 500-billion-euro ($633-billion-dollar) bailout fund, the ESM.

“Today Germany, with the approval of the fiscal pact and the ESM by all parties in both houses of parliament, will send an important signal … that we are overcoming the European debt crisis in a sustainable way,” Merkel told the lower house, the Bundestag, on Friday.Read More:http://www.dw.de/dw/article/0,,16062116,00.html

—The world’s top exporting nation amassed $2.7 trillion in aggregate domestic savings by the end of 2009, a pot likely to grow sixfold by 2020, according to the World Bank. Experts are predicting a surge of overseas takeovers by Chinese companies over the next decade. A five-year plan Beijing approved in March calls for establishing “international sales networks and brand names.”
Chinese companies’ investment in European businesses, which totaled just $853 million in 2003-05, surged to $43.9 billion in 2008 through 2010, according to Dealogic, a London consultancy. The burst gave Chinese companies control of 118 European businesses.
In the latest deal, Chinese personal-computer maker Lenovo Group Ltd. last week agreed to buy 37% of Medion AG, a German computer and consumer-electronics company, and will launch a public offer for enough additional shares to gain control. —Read More:http://online.wsj.com/article/SB10001424052748704355304576214683640225122.html

It all must be part of a love-hate relationship that is intrinsic to human nature; the search for something that embodies failings we can see in ourselves; poor Greece, poor Merkel, poor Hollande, etc. as sort of surrogates, in which ultimately we would like to root for them, or if not to succeed at least to keep some remnant of self respect. After all, its an identical life and death battle for respect in a universe that is disrespectful which seems the same dynamic in each of us.Perhaps their lack of understanding how the world works and they are being set up for a bad fall, is, in the end a kind of innocence. But still, the natural urge is to protect that innocence and tell them its going to be all right, even if the bruises may never heal.

The real problem in the euro area is likely the exchange rate system itself ; the fixed exchange rate between countries based on the unrealistic gamble that the poorer countries could close the productivity gap, that the Portuguese would be more like the Dutch, and that the weaker states would assimilate and incarnate those values and assume the heavy lifting. Plan B was that if the economies did not homogenize then workers in poorer countries, now mobile, would move to the north; which was also pie in the sky thinking. What transpired was the contrary:productivity gaps widened, and Gemrany became a type of European China on China’s old model, where wages and prices were kept low, they avoided inflating their economy, and developed huge current account surpluses. The trucks of goods never flowed into Germany, which created the pathologies that seem to profound to deal with today. Or at least we are at the eleventh-hour…


( see link at end) Over the past five years, as much of the developed world has staggered through crisis, a new type of capitalism has emerged as a challenger to laissez-faire economics. Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market. By 2015 state-owned wealth funds will control some $12 trillion in assets, far outpacing private investors. From 2004 through 2009, 120 state-owned companies made their debut on the Forbes list of the world’s largest corporations, while 250 private companies fell off it. State companies now control about 90 percent of the world’s oil and large percentages of other resources—a far cry from the past, when BP (BP) and ExxonMobil (XOM) could dictate terms to the world. …

…It is a mistake, however, to underestimate the innovative potential of state capitalism. Rising powers such as Brazil and India have used the levers of state power to promote innovation in critical, targeted sectors of their economies, producing world-class companies in the process. Despite its overspending on some state sectors, the Chinese government has nevertheless intervened effectively to promote skilled research and development in advanced industries. In so doing, the state capitalists have shattered the idea that they can’t foster innovation to match developed economies. State capitalists’ combination of government resources and innovation could put U.S. and European multinationals at a serious disadvantage competing around the globe. Read More:http://www.businessweek.com/articles/2012-06-28/the-rise-of-innovative-state-capitalism

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