The size of Europe's bail-out fund needs to be more than the 500 billion euros currently envisaged, Italian Prime Minister Mario Monti said on Tuesday, but he declined to give an alternative figure.
Speaking to reporters in Brussels, Monti said the European Stability Mechanism, due to become effective in July, needs to be increased but he refused to confirm reports that he had asked for a capacity of 1 trillion euros, Reuters reports.
The PIIGS countries have huge welfare/bureaucratic governments, which means their revenues will never keep up with spending. Further, increasing taxes won't do the trick as it will only result in more of the economy going underground while others flee. Greek and Spanish youth are heading to Brazil.
Parts of the eurozone are becoming a wasteland.
I was just reading about the European Stability Mechanism the other day (because I am from Croatia and we had a referendum to enter the European Union last sunday). I found these gems in the Treaty Establishing the European Stability Mechanism (http://en.wikisource.org/wiki/Treaty_Establishing_the_European_Stability_Mechanism):
ReplyDelete* The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.
* The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable.
* The premises of the ESM shall be inviolable.
* Governors, directors (…) and staff members are immune from legal process with respect to acts performed by them (…) and shall enjoy inviolability in respect of their official papers and documents.
Basically the ESM assets once established are untouchable by anyone. Also the managers are immune from any kind of prosecution or control whatsoever.
Does anyone think this can end well?
Also, what about the moral hazard that arises from all this?
Who is John Galt?
ReplyDelete"Further, increasing taxes won't do the trick as it will only result in more of the economy going underground while others flee. Greek and Spanish youth are heading to Brazil.
Parts of the eurozone are becoming a wasteland."
Hopefully we're getting closer to the day where American can no longer puppet the "Europe shows that socialism works" myth.
ReplyDelete