Larry, I am floored, for a smart economist like AG to spend so much verbiage on the Euro and not to discuss, even in passing, the potential tensions in the Euro sector that could develop from divergence of national economies within the Euro area, is simply flabbergasting. What happens now if the current slowdown in the US drags Europe into its own slow down (and historically Europe is slower coming out of such slow downs due to its slightly less flexible labor system), then to add insult on injury, one of the countries (and I have both Spain and Greece as potential candidates right now) run into a deeper contraction than the others. Such a country within the Euro zone, is left only with fiscal means to stimulate their local economies (and in fact is in a "Sodom bed", since the maximum budget deficit allowed will be 2% of their GDP), effectively, yielding all powers to the monetary tool to the goodwill (and slow to decide) of ECB. That statement coming from an economist that has just decided to use the printing press with abandon, does not recognize that there might be circumstances where some countries in the "Union" will possibly face similar straights, and in a lengthy dissertation, not once mentions the possible repercussions if such need is not addressed. By gosh, to me it says one of two things, either that whole exercise AG has gone through since Jan 3 of last year, and is still in the process of doing, was not necessary, or, Europe is going to get cornered in a lengthy morass of lack of economic growth (and thus major weakening of the euro) because they do not follow AG "emergency" moves. Something is quite fishy here in my opinion. Is he trying to keep us in the dark?
Zeev |
