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Pray For Graccident—–It Will Trigger The Demise Of The ECB And The World’s Toxic Regime Of Keynesian Central Banking
David Stockman: It is not surprising that in a few short months Yanis Varoufakis has proven himself to be a thoroughgoing Keynesian statist. After all, what would you expect from an economics PhD who co-authored books with Jamie Galbraith? The latter never saw an economic malady that could not be cured with bigger deficits, prodigious printing press “stimulus” and ever more intrusive state intervention and redistribution.
In what is apparently a last desperate game theory ploy, however, Varoufakis has done his countrymen, Europe and the world a favor. By informing his Brussels paymasters that they must continue to subsidize his bankrupt Greek state because it is the only way to preserve the European Project and vouchsafe the Euro, the Greek Finance minister blurted out the truth of the matter, albeit perhaps not intentionally:
“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe,” he said.
“Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the eurozone is not indivisible,” he added.
He sure got that right. People who believe in democracy and economic liberty anywhere in the world should pray for a Graccident. During the next several weeks, when $1.8 billion in IMF loans come due that Greece cannot possibly pay, there will occur a glorious moment of irony for Syriza.
If it holds firm to its leftwing statist agenda and takes Greek democracy back from the clutches of the EU/IMF apparatchiks, Syriza will strike a blow for democracy and capitalism in one great historic volte-face. That is to say, defiance of the Germans and the troika would amount to a modern monetary Marathon; it would trigger a thundering collapse of the ECB and the cancerous superstate regime built upon it in Frankfurt and Brussels—–and, along with it, cast a mortal blow upon the worldwide Keynesian central banking regime, too.
The hour comes none to soon. In a few short years under Draghi and in the context of Europe’s fiscal and economic enfeeblement, the ECB has been transformed into a hideous reverse Robin Hood machine. So doing, it has gifted financial gamblers and front-runners with hundreds of billions of ill-gotten gains in the euro debt markets.
In the days shortly before Draghi issued his “whatever it takes” ukase, for example, the Italian 10-year bond was trading at 7.1%. So speculators who bought it then have made a cool 350% gain if they were old-fashioned enough to actually buy the bonds with cash. And they are laughing all the way to their estates in the South of France if their friendly prime broker had arranged to hock these deadbeat Italian bonds in the repo market even before payment was due. In that case, Mario’s front-runners are in the 1000% club and just plain giddy.
While it is extremely difficult to think of a reason that would justify such wanton redistribution to financial gamblers, the ECB rationale is so astoundingly threadbare as to be laughable. In a word, Draghi and his minions claims that Europe’s economic torpor stems from too little inflation and too little borrowing by private households and businesses. Hence, they have no choice except to drastically falsify prices in Europe’s entire $20 trillion bond market in order to rekindle 2% inflation and get economic growth off the flat line.
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Source: http://marketdailynews.com/2015/05/28/pray-for-graccident-it-will-trigger-the-demise-of-the-ecb-and-the-worlds-toxic-regime-of-keynesian-central-banking/
