EU marriage,will it end up in divorce?

November 17, 2011 at 2:31 pm Leave a comment

There is a nice analogy of the EU sovereign debt crisis as that between a couple who can’t bear to divorce even though their marriage is in tatters due to a spendthrift and a saver living together but with separate finances. The blogger argues that the least painful way is for ECB to print money to buy the sovereign bonds,which i said earlier.

Although the crisis will abate with ECB printing money and thus raising inflation and depreciating the Euro, the real work still lies ahead with structural reforms to restore competitiveness,grow the economy and reduce deficits. Of course, a fiscal union will be the long term goal which must be attained faster if they don’t want their marriage to end in tatters again.

“You know a marriage is not that strong if spouses keep their finances separate. This is exactly the same with the member nations of the EU. For many years, lead by politicians and like a dog to a bone the markets and big business wore the flag of the yellow stars and blue flag. Everyone is happy with Europe as a work in progress and nobody really cared about the destination as long as they are all happy. Easy debt had made them happy. But debt must be repaid and that is now.

So why wouldn’t they file for divorce eventually? Because going separate ways take courage. Also they are masters at self denial to the point that they have been eating their own propaganda for years. Like I had written before, much of Europe is theatre. Europeans want to be safe, but that is exactly where danger is. Safety comes from the courage to be free, but they fear risk.

In the end they might allow the ECB to print money as this is the least painful option. The Germans would hate this thoroughly but do they have the courage to go alone? France cannot hold hands with them. She may not even be able to keep her AAA rating.”- From the blog “Bloggingformyself”

Entry filed under: Investing. Tags: .

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