Slugger O'Toole

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Euro crisis: “A fiat currency backed by heterogeneous sovereigns is irremediably fragile…”

Wed 6 June 2012, 10:05pm

The Financial Times’ chief economics commentator Martin Wolf was at the Bilderberg meeting in Chantilly this year too.  And on his return, as spotted by the Guardian’s eurozone crisis live-blog today, he has had this to say.

How much pain can the countries under stress endure? Nobody knows. What would happen if a country left the eurozone? Nobody knows. Might even Germany consider exit? Nobody knows. What is the long-run strategy for exit from the crises? Nobody knows. Given such uncertainty, panic is, alas, rational. A fiat currency backed by heterogeneous sovereigns is irremediably fragile.

Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events. Perhaps the panic will vanish. But investors who are buying bonds at current rates are indicating a deep aversion to the downside risks. Policy makers must eliminate this panic, not stoke it.

In the eurozone, they are failing to do so. If those with good credit refuse to support those under pressure, when the latter cannot save themselves, the system will surely perish. Nobody knows what damage this would do to the world economy. But who wants to find out?

Hmm…

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Comments (2)

  1. erewhon (profile) says:

    “Bilderberg: Alex Jones and co-host Aaron Dykes cover important Bilderberg leaks on the Wednesday, June 6 edition of the Alex Jones Show. Alex talks with Guardian journalist Charlie Skelton who received information revealing that Republican presidential selectee Mitt Romney secretly attended the globalist confab last weekend as other past presidential nominees have, including Obama and Bill Clinton”. http://www.prisonplanet.com/

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  2. erewhon (profile) says:

    Bilderberg 2012 reports:

    http://www.infowars.com/bilderberg2012/

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