Saving a Failed System
Euro system is a disaster waiting to happen.
by Stephen Lendman
Combining 17 dissimilar countries under one monetary/fiscal system assured disaster waiting to happen. One size fits all rules don't work. Euro expert Bernard Connolly knew it before the euro's 1998 introduction.
Saying so cost him his job as EU monetary affairs department head. He called the euro system a harebrained idea doomed to fail. He was years ahead of his time.
Since 2008, one crisis conditions deepened. Stopgap solutions buy time but nothing else. Massive money printing keeps wobbly Europe afloat but for how long. Bailouts, rescue plans, debt monetization, and other forms of money manipulation haven't made sick economies healthy.
Prosperity remains elusive. Money used for zombie banks and speculation sacrifices growth and millions of households with it. Debt problems can't be solved by adding more to existing amounts.
Financial expert Martin Weiss calls the West's financial crisis a debt monster. America and Europe face similar problems. Current US debt levels are three times what they were four years ago, six times greater than in the mid-1990s, 10 times mid-1960s levels, and hundreds of times compared to earlier periods.
There's no way to hide or fix it with bad policies. It exceeds GDP. Washington owes about $1.05 for every product and service dollar produced by all local governments, companies and individuals.
America is "passing a point of no return," says Weiss. It's "beyond which any new government initiative to end the crisis will probably just make it worse." Festering financial problems constitute "the definitive crisis of our generation."
Instead of responsibly addressing them, bipartisan complicity assures worsening, not improving conditions. Western economies are declining, not prospering. Europe's worse off than America.
ECB policy failed dismally. Throughout 2011, it intervened in bond markets. LTRO (Long-Term Refinancing Operation) 1 and 2 schemes provided over one trillion euros to troubled EU banks. They also got other liquidity windows.
Greece, Portugal, Spain, and Ireland got bailouts. Much more is needed. In the process, the ECB ballooned its balance sheet above 3 trillion euros. It's 30% more than Germany's economy. It's Europe's largest.
Everything tried so far failed. Time alone was gained. Crisis conditions aren't resolved. Solutions aren't rocket science. They're avoided to give zombie banks more money and keep failed economies afloat but not fixed.
Greece's debt crisis exploded in early 2010. Billions poured in to help. Conditions now are worse than earlier. Athens faces another major budget shortfall. It's greater than previously estimated.