Extend and pretend in Europe
I was on the Lang and O’Leary show on CBC last night to discuss the European sovereign debt crisis. I didn’t say anything on the show you haven’t read before here Credit Writedowns. Basically, the goal of policy makers is to extend the life of the existing credit issued by European financial institutions and pretend Greece is not insolvent.
The widening European sovereign debt crisis is a direct result of this dangerous extend and pretend policy. Tomorrow we will see whether the ECB has the temerity to step in and start buying up Belgian, Italian and Spanish debt to stem the tide. If they don’t, things will get worse.
The full video is available by clicking on the image below. My segment is near the 18:00 minute mark.
Do they have enough money to end the crisis. Much of the Greek problem is bad german lending over a number of years. They will need very deep pockets to escape from this crisis. I do not see that happening. The US is in no better situation. They have extended and pretended the debt cap for a few months. That will come back as austerity when they set the budget.
Good show, and good comments. I liked your answer to the question “what would the US credit rating be if it was a company”. Plenty of idiots on CNBC are either too stubborn or too stupid to acknowledge that the question is nonsensical because a company is not a country, not when it comes to currency.