Cameron urges Hollande to back Eurobonds but rejects Eurotobin tax. Hollande wants to press for Eurobonds but also the Eurotobin tax. Merkel supports him on the transaction tax but refuses Eurobonds. And Cameron...
I really seems beggar thy neighbour has become very fashionable among the big countries.
Personally I do think that Eurobonds could help in the short term, something which makes in my mindset quite attractive, however they carry a whole bundle of potential longterm problems. It is strangely similar to the Euro idea but with more downsides for the competivess of Eurozone on the world stage.
Internally Italy the huge transfers from the North to the South have been extremely inefficient at creating national wealth, with the multiplier being certainly much smaller then 1 and getting lower. The South champions quite a few rankings, sadly mostly when it comes to things like the auto blu, the cost of the casta politica in general and unemployment etc.
The various regions have but little incentives to become more efficient as the lira and now the Euro kept rolling to support the deficits. This is one of the reasons why we lost competitive ground.
In the European context it will punish the good performers and help the poor ones. Economy is no morality game, but this should go only for the short term and a crisis. To ingrain such a behavior into the Eurozone is highly dangerous for the future of Europe, especially considering the success of the Euro. The Euro did ingrain the belief into Greece and other countries that credit comes cheap and is (always) readily available. It didn't do a lot of good, didn't it.
@Suferbeetle: The classic account of the crisis, by Milton Friedman and Anna Schwartz, concluded that the collapse was largely the fault of the Federal Reserve, which failed to provide enough liquidity to keep the banks functioning and thus end the panic. After the crash, the establishment of the Federal Deposit Insurance Corporation was intended to ensure that deposit holders never again had to live in fear that their savings would be in jeopardy. What are the lessons for the eurozone?
I wanted just to add that Friedman and Schwartz really do sound rather leftist in this regard compared to part of the politcal spectrum of the US if we consider the attacks on the FED for doing their job at pumping liquidity by many and quite creative means into the market. The ECB has done so far a good job in some areas but it was so to conservative in others.
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