Yesterday, I briefly examined how a pack of big-noting financial market traders were trapped in stupidity by patterned behaviour and self-reinforcing group dynamics (aka Groupthink). Today, we consider the neo-liberal Groupthink that continues to trap political leaders and policy makers in Europe into a web of denial and stupidity. In both case, innocent people have suffered huge negative impacts while, by and large, the idiots have escaped fairly unscathed. The recent data from Eurostat shows that growth is fairly flat in the Eurozone and industrial production is in recession. It also shows that the banking system is in deep jeopardy and the so-called reforms that were introduced post-GFC are not considered robust by investors. With massive bank deposit flight going on and banking share prices plunging, it is clear that the ‘markets’ have lost faith in the financial viability of the Eurozone. Meanwhile. Mario Draghi winds the key up in his back and tells the world that everything is fine and the ECB is on top of the situation. With chaos descending on the monetary union again, the ECB cannot even achieve its single purpose – a stable 2 per cent inflation rate. It has failed to even achieve that over the last four years. One couldn’t write this sort of stuff if they were trying.…Anyone making odds yet on when the EZ implodes?
Bill Mitchell – billy blog
The European circus continues
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
2 comments:
Like all these things the EZ will run on far longer than anybody can possibly imagine and the final collapse trigger will be something apparently trivial.
Hopefully it won't end up with the same result as Sarajevo 1914
I remember the talk about European Debt crises and how to solve it. The prevailing idea was basically that it was unsolvable. They were saying that money printing by ECB would be just self deceiption since it would cause inflation and that the real problem in Europe was out of control government spending. Now the ECB has printed massively and there is no inflation, but nobady remembers those talks now. Debt crises could return and it would be presented as a shered sacrifice between member state taxpayers.
The only public debate right now is about how much to damage the economies in question. Krugman, Piketti, Varoufakis, Tsipras and lately even IMF would want to see less damage than eurogroup(Germany). They have all stated that debts and deficits are a problem and need to be reduced, but not so suddenly and not so much. and not when the economy is in depression.
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