Think the European government debt crisis is over because of the latest fancy “rescue plan”? Think again.
The Eurozone is already in depression, the PIIGS’ governments continue not to pay their way, banks who’ve already lent to the PIIGS’ governments continue drowning, and the solution is not for governments to stop their overspending (despite its so-called “austerity measures,” the Greek govt for example will continue spending billions more than it has, ditto the Poms and all the fiscally malfeasant Eurozone), nor to take the pressure off the banks whose over-lending made the over-spending possible. Instead, it’s to demand that over-lent banks already overloaded with bad Greek paper get more of it, in a plan so indecipherably complex that the “plan” really amounts to a hope that no-one could possibly understand either the plan the full extent of what this makes inevitable.
This is intended to be the model for every country facing its own Greek moment.
It takes faking reality to a new extreme: it demands not just that progenitors of the plan keep their blinkers on, but that the bankers themselves put their heads in the noose while pretending they’re simply being fitted out with new clothes.
Or in the words, of the Financial Times’ Wolfgang Münchau, it’s not just like kicking the can down the road, it’s “the equivalent of putting explosives into a can, before kicking it down the road.”
[Hat tip Economic Policy Journal]
UPDATED: Links added; commentary sharpened.