Between two nightmares


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Readers' comments



There are some points in this article which are important and at the same time totally wrong.
1. "The moral is clear: profligacy leads to economic chaos, political extremism and ultimately to catastrophe for all of Europe"
In which history book of which university of which scholar is profligacy on behalf of Germany the reason that led to economic chaos?
No need for deep research. High school level history is enough.
Totally destroyed economy+ destroyed country, impossible and huge war reparations + impossible restrictions imposed by the Versailles treaty, and the collapse of the US economy, were the main reasons. The second one being by far the most important.
I am surprised by the magnitude of this mistake.

2."Contagion from Greece has clearly spread to Spain.....Italy is sure to follow and France may not be so far behind."

It is not a matter of contagion. As it was not in the case of Portugal and Ireland and it is not in the case of Italy.
None of these countries has a solid economy. They have deeply problematic economies each with its own characteristics. Contagion will be in the case of France and Germany.

Italy is not sure to follow.. Italy is following. Markets are blocked for Italy. Take a look at the spreads.

In conclusion, when Merkel is looking at the stamps you refer at your article fails to see that what has led to the German destruction, is what in proportional terms is trying to apply as solution to the European problem. The solution will not backfire to Germany.. it already has backfired.
She can dodge and avoid the fire or she can stand and take Germany and Europe down with her.
If she dodges there is still time.


Wasn't the 2008 crisis largely caused by complex financial instruments whose purpose was to disguise underlying risk?

And what is a Eurobond if not a complex financial instrument whose purpose is to disguise underlying risk?


In the past, I have not always agreed with the editors of The Economist, but always relished their analysis and good argument. When it comes to the Euro, however, this paper abandons all quality standards and surrenders to simple propaganda. Your increasingly shrill "arguments" in this matter have so many holes in it like a sieve - all in the too-aparent interest to help your friends in the City. Shame on you. You should rename your paper.

kwpreston in reply to maverickberlin

I agree. There was a time a few years ago when the Economist had a plucky independent and even contrarian streak. Today it has become just another politically correct conformist voice supporting the establishment line of more bailouts, higher deficits, bigger debts, and throwing endless money at banks.

Terence Hale

Between two nightmares. Angela Merkel is drawing the wrong lessons from the chaos of German history, history being a nightmare from which we are trying to awake. Not being “rocket technology” to revitalise the economy is simple. The upside down in the bath tub methods proposed and used are wrong. For example the British chancellor reducing tax rate is as good as doing nothing. If the chines government give every Chinese a penny to simulate the economy this would cost around 70 million euros the adminatrive costs until the tax rebate get down to a person is worth farthing to the individual. Financial stimulus for the economy should be direct such a with purchase vouchers, simple a straight the difference between pushing and pulling.


It is increasingly boring to read how this journal defends the interests of the creditors of the Eurozone on the one hand and those of its beggars on the other.
1. The comparison with the twenties is illegitimate as one of the cathalisators of the crisis is the intertwinning of the world economies and financial systems. The effects hierof are difficult to measure, therefore impossibile to extrapolate NATIONAL economic policies in the '20-s to the 21-st century.
2. It is also superficial and unfounded to expect that one nation/economy/person can "save the world" or Europe or the Euro.
3. The boring reiteration of the "German responsabilty" to pay for Southern inefficiency is only rhetorical and has no economic basis at all. If the creditors of the Eurozone together with the begging states (...for eurobonds and banking union) feel this need for propaganda, they should take it somewhere else...say in a tabloid or gossip newspaper. This approach diminishes TE's level considerably.
I hope that Merkel, Germany and the still surviving Northern nations keep their heads cool and stop the transfer union to the South.
The Euro is a mission to be aborted asap...

TE is lobbying for the British Banking Industry which holds quite a lot of Euro Zone assets and/or for British politics who'd like to have a quick fix of the crisis to protect their economy but don't care about the fate of creditor countries.

The comparison with Brüning is plain ridiculous because this guy slashed a third (!!!) of Germany's budget and caused a depression. TE's comparison with Brüning's politics shows two things: The magazine is printing cheap propaganda + today's Europe is so spoiled that even the effort of balancing budgets is already too much "austerity." How ridiculous.

You see, in Europe, there are only true "friends".

kwpreston in reply to flyingdutch100

The only way that Germany can "save" the club med countries is to continually subsidize them. The problem with the med countries is that their economies and budgets are fundamentally uncompetitive and unsustainable, and their politicians are doing everything that they can to resist necessary reform, because it undermines their patronage networks. Germany is continually being asked to bail out countries which do not want to get their act together. Everyone seems angry and resentful that Germany has done what it needs to do to get its economy in shape and compete. The others don´t want to compete and they blame Germany for it, and for not "saving" them.

flyingdutch100 in reply to kwpreston

I completely agree. I do not understand though why is Germany going on with bail-outs for ill-managed economies.
I admit, The Netherlands is hypocrite: we promote austerity at home and cut expenses in an extremely harsh way on one hand and we hand over money to the South on the other.
Today Dutch media joined the club of the beggars saying that - after the Greek elections - Germany should go easier on greece. This while at home we cut expenses like we were Greece or Italy.
Our politicians are completely out of line with the public opinion. Everyone wants Holland to stop subsdizing the South, at least as long as we have to make sacrifices to pay for Italians, Spanish and Greeks.
As the German court of justice isd the only serious thing preventing the stupidity of Eurobonds, I was hoping German politics might stay a point of healthy economic policy.

Wu Junda

Reading articles by your newspaper about the Euro crisis and especially on German attitudes makes me increasingly angry.

There are two main points of criticism:

1. You are completely disregarding the reasons behind the current crisis. This crisis is a direct consequence of the 2008 financial market crash. The ponzi-scheme that was underway in the financial market has simply expanded its scope to include entire nations. This crisis is the result of the states (failed, as we now see) attempt to save their banks, which were considers, as the Germans would say, "systemrelevant". Debt-levels have shot up in the years afterwards and far from preventing banks going bust, now the states themselves are in danger. However, if there is an unsustainable level of debts it will eventually lead to a crash. Maybe we should have spend less money on saving the banks in 2008 and let them collapse instead of distributing the pain over all of society and paying for it with taxpayer money. Yes, a recession or depression will be hard. Very hard. But pushing the debt around will only result in saving those that were actually behind it: the banks! Who is gonna pay when German fire power is depleted? The Chinese? The Americans? You gotta be kidding me!

Greece is a special case, since it has been actively manipulating its figures and deceived the rest of Europe into letting it join the Euro. It should be allowed to leave the Euro and go bust in a reasonable way and rebuild its economy the way Germany did during the 1990s and early 2000s under Gerhard Schroeder. The rest of the PIIGS should also heed that example without leaving the Euro.

2. Your ideas of German attitudes are utterly misguided. Instead of vilifying Ms Merkel, why don't you put the blame on all those countries that oppose deeper political union and the entailing greater stability of the continent? Ms Merkel is not fighting to prevent inflation in Germany, which btw has just dropped to the lowest levels in years. She is fighting to put all of Europe on a sound footing! She is fighting to prevent the forces of the financial market from controlling politics and whole societies in the future. Just as a reminder: The depression of the 1930s was a result of collapsed financial markets, just as it will be the case today should we indeed face a new depression. Blame those, who deserve the blame: Your friends in the City and on Wall Street!

dunnhaupt in reply to Wu Junda

@ Wu Junda: "Greece is a special case"

Indeed it is. Greece is the only member of the Euro zone that gained admission by fraud. As Warren Buffett said, only at low tide can you tell who isn't wearing a bathing suit.

Well, Europe is at low tide now, and guess who isn't wearing a bathing suit?


Indeed the real issue is "political union" more than the smoke in the eyes of bonds, banks etc.

Germany, as the only european grandstanding country, finds itself in the difficult position of having to take difficult decisions at a difficult time.

Problem is that for all its economic prowess, Germany is psycologically ill prepared: uneasy with the very concept of power, seeks escape into "angst". The very thing you do not need when having to take those decisions is fear (and there something could be learned from the more southern concept of "discernment").

But political union, with which Germany is struggling, is only the last configuration of a reaction to the driving force: financiers dreaming to be the masters of the universe. Wall Street dwarfs.

If history teaches something, sooner or later someone will start to call into question the cultures behind them: puritanism (Republicans) and zionism (Israel). European Union is meant to be, notwithstanding and, now, against them.


All the attempts by the anglo-saxon press to paint german disdain of inflation as pathological, it is a rational stance.
Germans are much more likely to live for rent and have savings. Inflation may be beneficial for someone who has financed real estate with debt, but for people here inflation would be a desaster, because it eats up their savings and increases their expenses at the same time.
The refusal by the british and american press to acknowledge that the same policy affects different countries in different ways is shameful.


There are language reasons why the word debt is not the same in german. The English language got two words and distinguish between: DEBT and GUILT. But in the german (and greek) language means debt: guilt (There is only one word). With other words: You are always guilt if you have debt (=guilt).

Wilhelm Röpke

Well, I would say she is in between tree nightmares. Depression, inflation and the Anglo-Saxon view of the things which are misleading. Following Anglo-Saxon's suggestion for improvements the euro zone would be very fast in the same hopeless position as the UK.
I would like to see that the UK puts money into countries without any rights of control. And the way the UK urge other countries to do it - the UK must take action and fill in the model role and issue blank checks. NO country in world would do it - especially not the UK - but it is forcing other countries taking action in this direction. The UK does not play fair.
It seem very easy to urge German taxpayers to accept that more and more finance burdens are put upon their shoulders. On the other hand, the Economist, has a understanding for the French president not transferring sovereign rights to Brussels. Though, the Germans should give up their sovereign budget (money) to Brussels. For Germany and its interest seem to be NO understanding. Nicely said - unbelievable!!
And the fact that NO country commented on the German proposal (further integration and sovereignty sharing) makes no irritation but scares one and has uncovered the actual interests of those countries - no action in return of the German money.
Moreover, what is not acknowledged that Germany has cleared its positions as regards several points and has responded to the crises and the needs more flexible than the Economist points out. This is also a form of demagogy made by the economist.
Should the euro fail there are all (countries withing the euro zone with its governments) to blame. But the economist just wants to make Germany and Mrs. Merkel responsible. Sounds like the Brits doing the same - make root against Germany - as they had ever done before the wars and as they have done until today.
The big question is: on which interest does THE Economist speak?
Its answers are not leading Continental Europe toward a solution but directly into the abyss. Therefore, TE is speaking only on the behalf of British banks, the rich and what is in their interests and favor.
What TE wrote about Mr. Brüning and the politics made then is correct.
Germany must be aware of it - and it is good that TE mentioned it because it must have been known in the Department of Commerce in Germany. Ja, the cuts, which are described as "savings", are in respect of the timeline much too tight. Germany must have known the outcome of Mr. Brüning's policy.

kwpreston in reply to Wilhelm Röpke

As an American and part of the Anglo-Saxon world I agree much more with the German position than the rest of the world. I think that the Germans are the only sensible actors in this drama, while everyone else wants a quick and easy "solution" to the problem, whereby Germany pays for everything.

I know that the media and elites in America love Keynsianism with endless debt, deficits and money printing, but I do not...and a lot of Americans do not either. But the media is controlled by elites who do the bidding of the banks, politicians and special interests.

Wilhelm Röpke in reply to kwpreston

Thanks. I fear that the US is heading towards very big problems. At the moment the US benefits of the "euro crises" because it is seen as "save harbor".

But as in several European counterparts, the US has a deficit in the currents accounts for years.

There is no solution in spending money and take out further debts. The countries must reform their supply side and parallel start hold off consumption so that current accounts are balanced in future. It goes without saying that it will take time. The most European countries became too expensive because they increased their wages nonsensically. Combined with extreme low interest rates it was as pouring gasoline into fire.

Comparison with Germany (current accounts and deficit) during the 90s is tricky because if 17 million people were added to a folk of 60 millions - well that will cause some over consumption. But Germany had had a surplus in currents accounts before, therefore we could afford it, but nevertheless we transferred to Eastern Germany trillions - and we still do.

The banking collapse was the i-point of on the i. Well, afterwards always sovereign debts increase dramatically. History tells. However, nobody in charge cared about the huge risks in the balance sheets of their banks nor the risks of too favorable appraises. The end of this story is known.

What we will see is inflation in Germany at 4 to 6 percent over the next 10 years and parallel devaluation in the trouble countries - including France. German savers were made liable through the back door and must bleeding with their wealth - once more again. All these suffers are constituted with the moral club = Germany's liability.

All the money, Germany is urged for, will just give some time take a breath,
but the problems will have remained even more challenging. But the money will not
change the countries or even make their economies competitive against Asia.

Let me tell you, please: we need to prepare some exits from the euro zone.
If France is affected Germany must be able to stand beside it. Mr. Hollande is doing everything that France will end up close to insolvency. Italy and Spain need trillions in the next years. Both will not prevail within the euro - maybe Italy will. Economically impossible and against all odds that the euro zone will have 16 member states. Whatever politicians say - for this scenario, Germany must be prepared. Nothing matters more than the friendship between France and Germany - äh ja, the relationship to the US of course as well. What we not need anymore are more banking bail-outs whatever bail-outs are called.


I already know that Brüning´s austerity made things worse and that depression and mass unemployment propelled Hitler to power.

It is common sense in Germany. Our education system lectures this part of history at the 9th class. Don´t fool yourself, Economist.

The problem isn´t about inflation alone. Germany had higher a inflation rate during the Deutsche Mark time, too.

Pooling debt is about moral hazard and the not existing political union.

flyingdutch100 in reply to Siegbringer

Pooling debt is stupid, with or without a political union.
Banking union is stupid, with or without central regulatory organisms.
I honestly don't understand why Germany takes part in these discussions at all. Until Mr. Zuckerberg guarantees for all defaulting households in say...California and Florida. Or Mr. Gates for my personal mortgage. Can they "take some responsability please'?
It's laughable, it's stupid, it makes no rational and economic sense whatsoever.


When I was a young economics student I had the utopian view that one day we could control de economy, with all countries growing at a steady, reasonable, inflation-free state.

Oh, how much have I learned all these years. I have abandoned all hope of every seeing such stewardship over the world economy, and have long come to realize that the world economy is simply too complex to be managed by mere humans, and much less if the humans in charge happen to be politicians.

Well, maybe one day one huge artificial intelligence could run the whole thing, who knows...

umghhh in reply to zerge

economy is a complex system or an aspect of complex society. Things get confused when money get into picture - a tool needed in such complex system. It is perceived as wealth itself whereas it is just a proxy used to exchange i.e. it easily understood in stable situations - it is extremely difficult to comprehend what value of particular currency is in and around singularities. IT is also a fact that all economies speed up and slow down - something that our imperfect brains perceive as 'cycles'. In this slowing and speeding the equilibrium between amount of money in circulation and amount of services and goods does not exist or is moving. IN some cases control is lost (Weimar) in some cases a controlled currency reform is prepared (Franc in 1960) or just smaller scale devaluation (as again when french franc in 1969). I suppose we are facing similar situation - amount of debt if taken strictly is just not manageable - not even for Germany so a solution is needed. Defaults like one in Argentina are a nasty thing so some other way is needed maybe? Printing just the right amount is of course extremely difficult thing to do for political and technical/economical reasons.
Sometimes politics just failed although we still have not realized that. We can only try to prepare for the worst and hope for the best.
OC entities like TE and City have enormous interest (because of ideologin in TE and money in City case) in particular outcome and by shouting loud theycan create impression that certain things are unavoidable and thus make them so....
Probably also a thing that cannot be changed either.
Interesting times we live in.

HsiungNuisance in reply to zerge

Yes.... The Forbin Project. The Economist needs a new blog on AI economics. Bad debtor problem: Begin Message- "Dispatch a nuclear missile to capital XYZ unless they present their central bank managers for execution by 3pm tomorrow." - End Message

HsiungNuisance in reply to zerge

I understand your point. But if the AI is programmed by Humans? Begin message- Colossus thanks you for the vote of confidence.- End Message :(

Personally, I'm still waiting for that Star Trek:TNG moment when economics and the need for currency fades away and abundance is free. Ah, well...


the Economist:

"Blah, blah, blah this is our 20th article begging Merkel to keep the bung bunga parties going, give us more free money, or we will call you names blah blah blah, give it to us now!!! or we will throw a tantrum and more articles calling you names, Is this working? blah, blah"

HyunSmith in reply to HyunSmith

I like how the economist language on Merkel has gotten steadily worse, at first it was she needed to bailout the countries, now its outright "Ms Merkel is a FAILURE!"

I wouldn't be surprised with the rising desperateness of the Economist as the crises continues to see their name calling devolve into "Ms Merkel is a total Bleepin, Bleep!"


I think it really all boils down to one thing; that the common currency was a terrible idea.

There is nothing wrong with what the Germans are doing within the context of pursuing their national interests & preferences. They don't want to shovel money to southern Europe, and they want a tight monetary regime. Sure, why not?

Unfortunately, Euro as a currency is founded on the false assumption that all nation-states of Europe will sacrifice their interests & preferences towards a common goal. Within such a context, Germany is certainly acting like a fool. Other Europeans can also plausibly argue that, since the German preference for low ECB rates (when it was the sick man of Europe) was what caused the crisis in southern Europe, Germany should now sacrifice its interests to get southern Europe going. Problem is, the Germans are having none of this.

Which leads down to the stale, oft-repeated but still the truest conclusion; that a common currency for Europe was a disaster. In an era where nations decentralize to be more competitive, having a centralization scheme for countries was never going to be a smart idea.

Siegbringer in reply to Kim77

The ECB rates depend on the average of the Eurozone. The rates were too low for the PIIGS and too high for the North during the last decade, which caused mass unemployment in Germany and a boom at the periphery. Germany was in the same mess like the PIIGS now. It needed even lower rates. Therefore Germany decided to slash its wages and social welfare (internal devaluation) as the only solution, since it was captured in the Euro.
At the moment the ECB rates are too high for the PIIGS and too low for the North. What do the PIIGS have to do? And what should the Northern states try to avoid?

Josh_US Lux


"The refrain in Berlin is that European leaders like to talk of mutualising national liabilities, but hate to discuss sharing national sovereignty. As a federal state, Germany can easily imagine shifting powers to Brussels. But such ideas will test France, where the Fifth Republic gives the president huge power. Such fundamental changes would also require a rewriting of European treaties and perhaps even a new German constitution."


Dear author,

are you implying that since pooling sovereignty (what Germany would indeed be ready to do) is unfathomable to some, liability should be shared nevertheless?

Given the experience of the past 15 years, wouldn't you say that handing out a credit card to someone who doesn't agree to having his spending habits controlled by a NEUTRAL body is a bit extravagant an idea?

And if you don't think so, may I suggest you pass on your credit card to me? I'll promise I'll take good care of it. Really now.

This is Europe, after all.

Other than that, I'm waiting for The Economist's overdue renaming into "The Socialist".

a4DHy5HXtJ in reply to Josh_US Lux

Some time ago TE recommended a fantastic book called "The Dictator's Handbook".

Hence, TE should know, unaccountable socialism usually serves a small elite that rips off everyone else. In this case, TE seems to serve a banker elite that shits itself at the thought of loosing all its nice loans made to Euro-Debt-States.

Socialism at its best.


If Germany cannot persuade the south, maybe Germany should look north and east. While the south maybe acting as a bucket full of crabs, a north eastern union would protect Germany among others from them crashing out of the €Uro.

There is nothing particularly political in the way of Germany, Austria, Hungry, the Netherlands, Poland, Denmark, Latvia and maybe even Italy and Belgium, going ahead with 'more €Urope'. One could say that putting their military under the €U would work as well (and rid Germany of a lot of war guilt), having German possibly as the main language if the Latin's wont join.

Germany should work with those others mentioned and put a proposal on the table as a 'take it or leave it' and see what happens.

aris gr

Frau Merkel,is not being honest with the German taxpayers.She makes them believe that they give money which will never get back, to Greece. But the truth is, that Greece takes this money as a loan and pays interests at a high rate.Germany has already earned millions of euros from the loan interests in just one year.So you can understand that Frau Merkel tells only half of the truth to Germans and the rest of the European people.Also, nobody reveals the true reason why Greece is in debt and therefore needs the support of the IMF and the European Union...The problem began when the markets attacked Greece by increasing the rates of interests when Greece needed to borrow money, as every other country does, and being in debt like every other country is. But Greece became the weak link for the markets in the given moment, because it lacked heavy industry and exports in contrast to Germany,France etc. So markets gambled on the bankruptcy of Greece due to its weakness. DO YOUR RESEARCH, GET INFORMED, BECAUSE THE CRISIS LIVES NEXT DOOR!

Plazidus in reply to mashed potatoes

I think it's just as deep in Germany as in Greece. I'm not clever like you, but I sense that, unless Germany WAKES UP to the dangers, we will all pay a fearful price. I will not bore you with a learned disquisition on the subject; but, in the past fortnight, it is becoming increasingly apparent that the Self-Righteous Tendency holds sway in Berlin. Sadly, the Self-Righteous Tendency is very short-sighted, living up to Germany's self portrait as a land of thinkers and poets... and frightening the rest of us.

mashed potatoes in reply to Plazidus

If you are in favour of any of these debts mutualization schemes proposed by TE, I have a recommendation for you: Send your government a petition and tell Downing Street to mutualize Club Med's Debts. You could also lend money to them directly because Germany's credit rating is already in danger. What about that? We signed a contract with a so called "No-Bailout-Clause" and in my country, we try to respect the law. And we prefer some countries to leave, but if the sainted UK wants to keep them in the Euro at any price, go ahead.

Plazidus in reply to mashed potatoes

Sooner or later - I suspect - Germany is going to opt in. Like you, I'm unsure that this is a wise course for Germany.

I feel safer in predicting that, at about 5 minutes to midnight, the German centre of gravity, grumbling like hell, will roll towards the noble role.

How amenable to psychological pressure (blackmail, 'guilt' feelings) is Germany?

mashed potatoes in reply to Plazidus

Time will tell, but I think you will be dissappointed. But some countries are not here to stay in the currency. Those which were never prepared and never tried to be prepared are going back to their origins. Better buy some gold and other crisis assets, there are shaky times ahead. And if I were you, I wouldn't buy British bank shares.

mashed potatoes in reply to Plazidus

Opt in? You mean selling the future of our children to spoiled French socialists and Greek Marxists? I don't think so. If she dared to do that, we'd first send Merkel in a package directly to Syntagma Square in Athens, handcuffed on a silver tray so that the Greeks can have some fun. Afterwards, our constitutional court would cancel any silly decision.

Gwitreg in reply to mashed potatoes

french socialists weren't the sick man of EU when they were governing from 1997 to 2002!

soon you'll become the new sick man of Europe, because your one lane economy of exportations will get jammed again, you always repeat the same shemes since Bismarck

kwpreston in reply to aris gr

Interest rates went up for Greece because Greece allowed its economy to become uncompetitive. They took soft loans from the ECB and instead of investing them wisely, they blew the money on patronage networks and increased salaries. Once the debt level rose high enough, and the Greek economy was weak enough, creditors sensibly wanted higher interest rates to compensate for the very real possibility that Greece would never be able to pay it all back.

You say that Greece just want loans, not gifts, but what do you call a loan that is never paid back? A gift. Greece has already planned to default on much of its debt.

Impoverished Scot in reply to aris gr

Eh? The answer lies within your own comment: "when Greece needd to borrow money" - Q: where from? - from outside Greece of course, because the Greeks weren't saving, they weren't working hard or productive enough, nor were those who were "earning" paying any tax to pay for all the unproductive early-retiring civil servants! When the reality surfaced i.e. when the daylight penetrated the murky bogus books and the delusions of credit-worthiness were dispersed - the "evil markets" started to charge a higher "risk premium" - i.e. a price that reflected some of the raised risk of default (and that is now fact with the 50% write off). So, what reasonable man could blame the collective German taxpayer (or Merkel doing her duty on their behalf) from refusing to foot the bill for such profligate folly - in particular when he won't be given control of the spending! Oh how I'd love a blank cheque from a benefactor to fund an extravagant unaffordable life of the idle rich .... any offers? Impoverished Scot


I must disagree with the article in reference to Italy.
That our country will now be subject to intense speculative pressures in the wake of the Spanish bank bailout is assured.
That the cost of financing our sovereign debt, especially at the lengthier maturities, will rise, is assured.
But that does not mean Italy will be forced toward a bailout. In fact, given the size of our economy, I would say a bailout is clearly impossible.
Without meaning to insult Spain...
1) Spain promised a deficit last year of 6% - they overshot this by 2.9%; we promised a deficitd of under 4% and achieved 3.9%.
2) Spain is aiming for a deficit of 6% this year; Italy is aiming for under 2%, and perhaps a surplus next year (this may require yet another mini-budget reform).
3) Italy was the world's third largest borrower for 30 years (we are now fourth behind Germany), hence international lenders know us well and we have always paid...
4) No banks in the peninsula have significant exposure to the GIP countries. No banks have required bailouts. Several recapitalisations on private markets have gone very smoothly over the last several years. If necessary, we expect recapitalisations could still be effected in the future. In other words, no bank or corporate bailout expenses on the horizon.
5) Rising yields on bonds can be withstood for another year or two. Our average maturities have dropped, but are still at 6.7 years.
6) We are already beyond the rollover hump this year - which was fairly heavy for Feb-May. Only small monthly amounts from here on in. In the meantime, domestic holdings of our bonds have risen to 70% - higher than in all the other bailout countries.
7) Exports are strong and have returned to pre-crisis levels. In the meantime our imports are dropping (including energy/petroleum costs). Although this will also be a question of peace/war in the Middle East and whether or not petrol costs rise or decline this year, we may even achieve a balanced trade position by the end of the year - as last year's smallish deficit is now dropping quickly.
8) We still have friends around the world, willing to invest in Italy and buy our bonds. We are not as vulnerable or defenceless as other smaller European countries.
9)A very big question mark: We still have the Vatican - and over 100 Orders of priests, monks and nuns (let's cynically call them multinational corporations) headquartered in our country: that is a lot of potential investment money...
On the other hand, there is a deafening silence from the Vatican on the Euro-crisis. I think the Vatican has given up on European unity, because they realise they can no longer control it as they once did, during the Cold War.
Monti is not necessarily the right leader for this - but I think a certain clash is coming to a head in Italy between pro-Papist and anti-Papist forces. The Vatican may not like the fact that, without Berlusconi, they cannot control Italy as they did during the Cold War, but that is no reason for them not to assist the Civil State from whose teat they have suckled for too long. Ultimately, can they afford the bankruptcy/insolvency of the Italian Civil State?
How much investment money does the Vatican and the religious orders (Jesuits, Dominicans, Franciscans, Opus Dei, Knights of Malta and Rhodes, Salesians and one hundred others...) control?
None of these are willing to invest in the bonds of the Italian Civil State?
Ahem! Well then... the Italian people are watching events carefully. The pro-Papists have long believed the Papacy is a friend of Italy; the anti-Papists have long believed the Papacy is an enemy of the Italian people...

mashed potatoes in reply to MilovanDjilas


You forgot the Klingons, E.T., Paris Hilton, Elvis Presley (yes, he is still alive and among us!) and the the Knights Templar.

Josh_US Lux in reply to MilovanDjilas



Maybe. But default is not. And that's were ever-so-sclerotic Italy is heading: into the wall. Bam!

Don't say you haven't been warned.

Kim77 in reply to MilovanDjilas

You really have a sick obsession with the Vatican... I already caught you once ranting about the Vatican being the source of all of Italy's problems.

And why should the Vatican, essentially a HQ for a religious entity, speak up about the Euro crisis at all? I am inclined to be more favourable to southern Europe because I think they are being maligned by the Germans and their supporters in the conservative camps around the world, but you are really taking it too far when you blame a country of 60 million people's woes on a city state with 800 people.

MilovanDjilas in reply to Kim77



Apparently it escapes you that 800 people "command" one billion faithful around the globe. Compare one billion to 60 million.

And, take a look at the partial list of orders I have posted here. To say that the Church is the world's richest corporation is a vast understatement - and of course they are richer than the Civil State.

You are also apparently unaware that the three fathers of the EEC, Konrad Adenauer, Alcide De Gasperi and Robert Schuman were members of Opus Dei. The Vatican was the main driving force behind European integration for 40 years, during the Cold War.

The Vatican kept Italy divided for over a thousand years. Their millenial obsession has been to keep the Civil State weak in the peninsula - and the modern version of that, under Berlusconi, was DELIBERATELY not consolidating the finances of the civil state over the last decade - that was the real reason for their electoral sponsorship of Prime Minister Bunga Bunga.

Today's paper - the Bishop of Vicenza criticises Angela Merkel's Germany for "being concerned, with extreme seriousness, only for its own safety, while putting at risk the safety of others in Europe."

Kim77 in reply to MilovanDjilas

Great story, Milovan.

But erm... where is the evidence? And what would the Vatican gain from European integration? Have a bunch of secular states band together so that they could effect a continent-wide socially liberal regime? No, thank you, says His Holiness.

Seriously, man... if something doesn't sound right, most of the time, it isn't right. I can't believe there are still people like you. Play Assassin's Creed too much? Read too much Dan Brown?

MilovanDjilas in reply to Kim77

You would confuse the Vatican's power with a two-bit writer like Dan Brown? We have a certain communication problem here...

I urge you to google Adenauer, De Gasperi and Robert Schuman and Opus Dei. Take a look around. De Gasperi is currently under official consideration for beatification (sainthood) since 1993 when he was named by the Vatican "Servant of God".
Robert Schuman was named "Servant of God in 2004, and the beatification process was opened officially for him in 1990.

This article regards the "Christian roots of united Europe":

There is also a lobby to get Adenauer canonised...

However, your comment I believe does reflect Vatican thinking:
So you see - that is the real problem - the Church sponsored European unity before, and now is trying to strangle it, since we refused to recognise "the Christian roots" of Europe in the still-born European Constitution (which they also strangled in France). Personally, I am in favour of recognising officially the Pagan roots of Europe: Aristotle, Plato and Socrates, for example...

Do you really think this useless medieval institution should be deciding the fate of Europe in this day and age?

Kim77 in reply to MilovanDjilas

No, no and no.

A toothless European 'constitution' recognizing or not recognizing the Christian roots of Europe is pretty irrelevant in the real world, I am afraid. That's not going to change the secular-minded Europeans into God-fearing masses, or do the same for its vote-begging politicians. If you seriously think a mere reference to Christianity is going to suddenly make Europe subservient to the Vatican, you have a problem.

And I'd say the papal officials at Rome probably agree with me, although they'd probably wish they don't. They are a smart bunch, and they foresaw, as early as the 16th century, the world in which we live right now. Are you telling me that they were really dumb enough to think that an integration of a Europe in the throes of socialism and communism would serve their interests?

You attribute too much cleverness and too much stupidity on the Vatican at the same time. It doesn't work. Stop falling in love with your theory of how the world functions. I know it's fascinating for history buffs like you, who would still like to think that the modern world is merely a continuation of ancient intrigues and rivalries, but the fact is, that simply isn't the case. There are superpowers called the United States and the Soviet Union/Russia that have been pulling all the strings in Europe for the past few decades, I'd suggest you google those first.

Yankee Kid

You can't say that Angela Merkel is drawing the wrong lessons from the chaos of German history. She is using common sense. You don't borrow money when the rates are high even if you could pay it back. What we should be doing is help her get it done right.
The German's have suffered enough and lost everything they have from the chaos of German history. They don't want that history repeated again and neither do we.
Take a look around and you can see that the entire world is having troubles of some kind and nobody really know what to do. Everyone knows what the problem in Europe is which is their history of using wars instead of coming together to solve their problems. You can bet your life that Germany does not want to rule Europe. But they could all come together as Germans and that would suit them fine and here we go again. Stop the nonsence and work together and find a way to get it done with what ever it takes to create a United Europe before you lose everything you have. Money does not rule everything until you have something to bring you togerther first.


Just asking, so are France and UK drawing the right lessons from history? Wherefrom my curiosity: to my knowledge, UK and France ... historically have drawn opposite lessons from history.
So how many truths have we on the table - two, or three?



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