Monday, December 5, 2011

With respect to conflicts within the Euro zone countries, The New York Times reported:
"One dividing line is that the Germans, along with the Dutch and the Finns, remain adamantly opposed to what some consider the simplest solution: allowing the European Central Bank to become the euro zone’s lender of last resort and to buy sovereign bonds on the primary market, in unlimited amounts."
I am convinced that this is the best and only solution. It is a happenstance of history that a German is the President of the ECB and that the German thinking is dominated by a past experience of disastrous inflation. This ghost kept the ECB even from lowering interest rates until recently.
Italian leaders announced an austerity program to ostensibly improve their economic growth. Don't these people learn from experience? The British have been going down this road for some time and their economy is stuck in the mud. Some reductions such as in the very generous Italian public pensions are in order. But, massive reductions in government spending just create more unemployment.

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