Lender of First Resort


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Lender of First Resort

  1. 1. Lender of First Resort?How long have the EuroCrats been trying to solve the EuroCrisis?Too long.Has the situation improved?No.Has the situation become worse?Yes.DONT DO THAT!My constant complaint with everything that has been said or written about the crisis isthat it is descriptive not prescriptive. The EuroCrats keep toiling away, clutchingretentively to the process of applying Band-Aid after Band-Aid to the situation with noresolution.Now it is time to rethink the way you rethink the problem and the solution.The phrase that suddenly jumped out at me is "Lender of last resort." Why?Lets try to rethink a possible solution. This is not an answer. This is a question. Thequestion is very simple.Will this work?Forgetting the institutions we have for just a moment, The IMF, The ECB, The EFSFand look for a metaphorical, UEB. The Unified European Bank. And put aside, for amoment the declamation, "We cant do that because....."Will this work?Make the UEB the European Lender of First Resort.The UEB is the first purchaser of Greek Bonds, Portugal Bonds, French Bonds, GermanBonds, &c. The UEB ignores bond ratings. They become irrelevant.They buy the bonds (for the purposes of discussion only) at 5%.The UEB then becomes a reseller, reselling the bonds at, say 6%. Yes, I know this isless than they are paying out. This is the subsidy in lieu of the bottomless pit of thebailout solution.
  2. 2. The bonds, offered by the UEB and backed by the EuroNations are more attractive thansay Greek Bonds or Italian Bonds, or now even German Bonds. (Remember theGerman Bond Sale Gone Bad?)However, "Austerity without Growth is not a solution." Slim Fairview. From TheQuotations of Slim Fairview.Now you have Step Two.You can choose:Plan A: Growth and Economic Development.Plan B: Economic Development and Growth.That, of course, is a trick question. You cannot have growth without economicdevelopment.Privatisation is not a dirty when, for example, the Greek Bus Driver stops driving for themetaphorical Athens Metropolitan Transit Authority and begins driving for the AthensBus Company--and the Greek Bus Driver now owns stock in the Athens Bus Company.The Greek Bus Drivers goes from a paycheck (tenuous, not guaranteed, smaller than itwas due to austerity measures, and non-existent if he gets fired) to earning a Paycheckand a Profit.He not only receives a piece of the pie, he receives a piece of the profits from thebakery because he owns a piece of the bakery.This may be a radical departure. However, if the EuroCrats continue to discussmeasures that have been implemented repeatedly and have repeatedly failed and failedmiserably to resolve the crisis, it may be time for them to rethink the way they rethinkthe problem and start thinking about some new solutions. New ideas. New methods.And please.....ask Angela Merkel to step down.Bon chance.Sincerest regards,SlimSlimfairview@yahoo.comCopyright (c) 2011 Slim Fairview