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La commedia e finita?

Don Coxe, the Canadian investment strategist, whose monthly publication Basic Points is required reading for anyone who follows financial markets, has a wonderfully mordant turn of phrase which from time to time he uses to devestating effect in illuminating current issues. This is Don on the Eurozone crisis, as seen from four thousand miles across the pond:

We remain of the view that no new promises, no new money creation, no new bailouts, and no new debts will resolve the basic problem – that only a few eurozone members have soundly functioning, globally competitive economies. That these nations should continue to subsidise their dysfunctional co-believers in Europeanism would be OK if it were not inflicting such damage on so many millions of unemployed young people, let alone the global capital markets and the global economy. During the last two years, the rest of the world has watched with growing impatience as leaders strutted and fretted their hour upon the stage and then, in many cases, were heard no more, becuase their own voters, in an overdue spasm of good sense, rejected them. There is an Orwellian aspect to the emerging nomenclature of the emerging institutions in this process of illusions and disilusions. The latest bailout banking entity is called The European Stability Mechanism, which is eurospeak for a lender that allows deadbeats to get even more hopelessly indebted in the name of stability”.

According to the most recent estimate I have seen, Europe’s leaders have so far “invested” something like three trillion euros, in loans, bailout funds, transfer payments etc, to try and keep the Eurozone going in its current 17-member format – and the results to date have been dismal. Now, with the region slipping into recession, and Spain hovering on the brink of joining Greece, Portugal, Ireland and Cyprus in requiring a sovereign bailout to avoid bankruptcy, they are gearing up to throw even more money at the problem. Don’s view is that “the euroelites should have declared La commedia e finita and rung down the curtain two trillion euros or so ago”. Future historians, I fear, will have little option but to pass a similar verdict.

Written by Jonathan Davis

August 9, 2012 at 9:23 AM

Posted in Don Coxe, Eurozone