While this writer seems to have most of the political issues identified, his analysis lacks a perspective that explains why the instability of the PIIGS countries Euro periphery. The metphor of the EMU and EU as being tied to the imperial construct of neo-classical economism (sic) as The United States of Europe requires a deeper inspection. First as a model it is extremely narcissistic in the manner totalitarianism. Second, posing the US/Federal state model as without significant flaws is self-deluding in addition. I expect that if some related research was done the dominant pattern under this model that the "balance of trade" among "states" would break down into rural areas where low value added and labor intensive products are produced against the areas where high value products are produced. This is also the basis of the PRChina's trade/economic strategies in using their own cheap labor as the bait to corporate return on investment ratios.There are significant areas within the US which are treated much like neo-colonial extensions. The under-development of these regions of extraction is quite deliberate, and it provides little basis to ever balance trade between various regions. Is a nutshell Ricardo's "comparative advantage" is just another utility in the library faith based fictions. The premised promises of raising all boats has no functional relationship with the prejudiced dynamics Germany seems to be locked into a historical and cultural commitment to neo-classical economics, aka faith based(finance sector) economics. In effect there is a much greater barrier to change in identifying the sovereign wealth of Germany to represent more than the other side of the PIIGS deficits and one down trading positions. Where the EU was promised as a path to collective prosperity, what has been delivered via the EMU has been a wealth extraction process. Neo-classical economics is effectively imperial in its coding. Another, question is whether some sense of German pride and sovereignty will blind the EMU/ECB to the part that its objectives and utilities have been detailed. The EMU is at a transition point where the ways out are either further forward or a full retreat into the past and fictions of corporate capitalism/neo-classical. The retreat is likely going to escalate the conflicts and Germany will uncomfortably have to recognize the large population of foreign born workers and their families as German citizen's. This makes the situation pretty much of the same cloth as World War II, and for that matter World War I never really ended except for the natural citizens. The MMT folks have been speaking to the issues of monetary and macro-economic dysfunction for quite a number of years. In short the EMU/PIIGS problems are a result of the design of the EMU. Either there has to be involvement in the fiscal and economic development policies of the otherwise sovereign countries who are pledged to the Euro need to have their interests also integrated into the political process. Part of the current dynamic is the identification of the interests of financialization who have substituted their own interests as foremost in the EU/EMU macro-economic model. Greece is not being bailed out. It will be the banks that made risky loans and ill-advised fiscal policies for the EMU. Instead of providing th basis for economic buoyancy, the switch was made to economic slavery under the neo feudalism of faith based economics. Tadit On Sat, 29 Oct 2011 08:10:15 -0400, Dante-Gabryell Monson <[email protected]> wrote:

below or on http://www.pippamalmgren.com/80.html

note : http://en.wikipedia.org/wiki/Monetization hence in this case, in my understanding, the issuing of ( central bank ) money ( and not, here, commercial bank credit ) in exchange of buying debt / government bonds. also see : http://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking

---------- Forwarded message ---------- From: Arno Mong Daastoel <[email protected]> Date: Thu, Oct 27, 2011 at 12:51 PM Subject: Re: [gang8] Abolishing the euro To: [email protected]

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Peter Spengler has drawn my attention to a good analyst.

Malmgren's point is that Germany is commited to price stability asnd therefore cannot accept a carte blanche to printing money for the euro's souther periphery. She claims the euro may die but only to return more realistic and stronger.

Arno

http://www.pippamalmgren.com/80.html**** Germany will not accept monetization****

*This commentary was submitted on the 19th of October in response to the Eurasia Group CEO Ian Bremmer's article in the FT entitled "Germany will never leave the Eurozone". The article can be found here<http://blogs.ft.com/the-a-list/2011/10/18/germany-will-never-leave-the-eurozone/#ixzz1bQFPH0FM>. *****

I respect Ian's opinion but *he does not capture the issue that is forcing Germany's hand*. They increasingly fear having to choose between permanent price instability and temporary currency appreciation. *What Germany cannot do is accept monetization of the debt*. The *social contract between Germany's citizens and its leaders preclude this option given their history*. ****

*If the ECB* under the new leadership of Mario Draghi buys so-called PIG bonds or attempts to *print money*, *Germany will feel it has a central bank that has no "rules*" and which simply *serves as a blank check to the other member states*. This *means permanent price instability*. If the *ECB refuses to monetize* the debt and no other white knight can be found (the IMF cannot fill the hole, Germany and China won't fill the hole, Tim Geithner would love to but the American public won't permit it, and the idea that the G20 can do it provokes howls of laughter from G20 government officials), then* multiple sovereign defaults will occur well beyond Greece. * The Greek *default will continue with new haircuts* leaving investors lucky to get 20 cents on the Euro. That would *mean a substantial fall in the Euro* and no possibility of recovery until the last element of default was done. That *will feel like permanent price instability to the Germans. * *Either way, Germany will find itself hostage* just as a skilled and prepared mountainclimber might find himself fully locked onto the mountainside but his colleagues are dangling in the wind. *National interest will demand self preservation* no matter how much Germany might like to keep the climbing team together. *They don't want to cut the rope but they may be forced to. * *A return to the Deutschemark will not mark the end of Europe, the European Union or the effort to enhance integration*. Instead, *Germany has already begun to emphasize the need for a new EU Treaty that would compel fiscal harmonization, penalties* for those that break the Maastricht Treaty rules and other undertakings that would harden Europe's defenses against economic default risks going forward. 100 years from now the Euro will be a trick question on a history test, given that it only survived for 12 years. How many people in the market today even remember an earlier version of the Euro which was called the Ecu? The FT should start a competition to name the new "Euro" that will have more substance behind it.

For those who argue that the Germans will never survive the massive appreciation of the DMark, should they decide to go down that road, they forget that *throughout history the Germans have usually got an appreciated currency and almost never compete on price anyway. They compete on quality*. And, is there really a European export market that would be sacrificed? It's hard to imagine many Greeks or Italians buying Mercedes in the next few years.

*The European project will move forward much more robustly once everyone finally realizes that the Euro in its current format is unworkable*. Nothing stops Europe from moving forward other than public opinion. *The fact is that Germany's social contract is very different* from the social contract between the citizens and the state in any of the peripheral countries. *What is required to satisfy Germany brings riots in southern capitals*. *What is required in Southern capitals breaks the social contract in Germany*. The failure of the Euro will bring this conflict into sharper focus and set the stage for new commitments to create a Europe that can satisfy the needs of the members without destroying civil society in Europe ****

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