In a way the two subjects are related and they just show all the nonsense that is going around.
1st the Euro. We know that the situation in Europe is getting from bad to worse. Contagion is a real threat. Let us look at the interrelated debt structure of European countries. It is like one Insolvent giving guarantee for another insolvent. Actually it is so.
My theory is that we shall see a break up of Euro and emergence of two Euro. A Northern Euro and a Southern Euro. But it is not going to happen tomorrow and I am sure of that not happening anytime time soon because of the following:
This is the front page of the Economist. When MSM starts to predict doom, it is usually other way round. They are spreading fear and doom but they will also force the hands of the reluctant politicians for one last round. Don’t forget, most of trade surplus of Germany is coming out of the PIIGS countries. If PIIGS go down, Germany goes down with them. So it is in the interest of Germany, not out of any love of Greece, that Angela Merkel will find a solution this Thursday. By solution I mean giving some more money and buy some more time. In the mean time, I expect Euro to go up to 1.50 or beyond. That will be a good time to short because then your money is guaranteed.
Coming back to Larry Summers, he is one of the reasons, Obama’s economic team never delivered. He now wrote an op-ed in Financial Times about how to save Euro. You can read it here: http://www.ft.com/cms/s/2/324f9054-b0a7-11e0-a5a7-00144feab49a.html#axzz1SajET0dR
The long and short of it is that ECB is right in protecting creditors and no financial institutions should be allowed to fail. In other word, do anything but save the banks. Now we know why Obama is Bush II. Because the people Obama chose, are from big financial institutions. Same people who caused the crisis in the 1st place with their greed, lies and recklessness. And people like Summers made sure that these big financial institutions are rewarded for their action. When he was in Harvard, he almost destroyed it. When he was with Obama, he made sure that his buddies in banks are taken care off and ordinary Americans are whipped. Now he goes to give the solution for Europe where by the big banks in Europe should be saved at any cost and the people in Greece, Italy, Ireland, Spain, should pay more taxes, endure hardships in the name of austerity and their assets should be sold off to the highest bidders. In other word, Summers suggest the same type of enslavement which he practiced in USA.
It is a pity that people like him is allowed to express their opinion.
