The Banker has an excellent article on this in their Bank Trends section. A picture speaks a thousand words!
We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its Member States. We also reaffirm our determination to reinforce convergence, competitiveness and governance in the euro area. Since the beginning of the sovereign debt crisis, important measures have been taken to stabilize the euro area, reform the rules and develop new stabilization tools. The recovery in the euro area is well on track and the euro is based on sound economic fundamentals. But the challenges at hand have shown the need for more far reaching measures.
Today, we agreed on the following measures: Greece
1. We welcome the measures undertaken by the Greek government to stabilize public finances and reform the economy as well as the new package of measures including privatisation recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to bring the Greek economy back on a sustainable growth path. We are conscious of the efforts that the adjustment measures entail for the Greek citizens, and are convinced …
Nassim Taleb says in this interview that the debt problems of 2010 are worse than those of 2008, he has re-released his now famous book ‘Black Swan’, and his core belief presently is that recession is not the issue, debt is the issue. Fragility is exacerbated by high levels of debt – we can see that from an Irish context on Sovereign Debt/Bank Debt (whether the problem is real or perceived).
One of the most poignant things Taleb talks about is the failure of stimulus, and he rightly points out that Greece is not being asked to ‘stimulate’ their way out of their debt issues, they are being asked to look for austerity solutions, perhaps Keynesian beliefs might be shunted once again into history?
The point holds true in our opinion, high levels of debt are a wealth destroyer and inhibitor to prosperity, the drag on economies, in particular our own, will be evident for many years to come.
Economist Richard Wolff compares economic forecasting to palm reading, before predicting himself that Britain will be the next victim of the global recession, citing that the average British family currently faces a debt amounting to 170% of its annual income.
The full video is more about capitalism in its current brand, the fascinating thing is that Wolff is neither an Austrian nor a Keynesian, he isn’t freshwater or saltwater, he thinks that both Hoover and FDR didn’t find the right solution, that WW2 was the answer (albeit a terrible one). This is a video that is absolutely worth watching.
The full version is available on Fora (a site well worth bookmarking!)