Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
to emerge this weekend is that the inevitability of Greece defaulting on debts is acknowledged.

Pussyfooting around for three years hasn't changed that immutable certainty : debts that can't be paid, won't be paid.

The crashing stock of European's banks is the market's way of marking to market the unpayable debts.

(The rest of the stock market is crashing too. Is that a matter of the value of productive enterprises being pulled down arbitrarily by the banking crash, or recognition that, with headless chickens governing us, we are heading for a deep depression? I favour the former explanation. The market isn't that smart.)

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Sep 12th, 2011 at 05:13:50 AM EST
The asset value crash is part of the process by which the capitalists drive the economy to depression.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 05:26:38 AM EST
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stock of productive companies is going down because people are selling. Why are they selling?

  1. because the indices (CAC40 etc) are down because the banks are sharply down (quite rightly), and the banks weigh heavily in the indices. Quick, panic, sell everything.

  2. some clever investors, seeing the sharp decline in banks, hasten to sell other stocks in order to buy the banks at "bargain" prices...

Why would the capitalists actually seek to drive the economy to depression? I can't see the upside.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Mon Sep 12th, 2011 at 06:15:11 AM EST
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The capitalists seek to preserve their individual net worth (or its purchasing power). Collectively, they drive the economy to depression.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 06:25:36 AM EST
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And those capitalists who are liquid during a crash can buy up on the cheap the assets of those capitalists who are not liquid. But they would proclaim and, possibly, even believe that provoking a crash would be quite deplorable.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 12th, 2011 at 09:00:59 AM EST
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This issue of the interests of individual capitalists (and countries) being at variance with their collective interests seems, to me, to be central to this whole crisis.  We have seen how, in the US, a few key strategically placed and politically active firms - think Koch brothers, Oil majors, Goldman Sacks etc - can drive an entire economic agenda (Tea party economics) which can enrich them at the expense of other capitalists, the economy, and of course everyone else.

Remarkably they can (mis)represent themselves as being on the side of the common man, whilst those, like Obama, who want greater regulation/taxation in the interests of capitalism and the economy as a whole are presented as the stooges of Wall as opposed to Main street.

This has got to be one of the greatest marketing tricks of all time.  Teh Stoopid will always identify with the rugged individualist/"self-made" capitalist versus the "wealth destroying" bureaucratic economic regulators/taxers.  Individual need/greed is leveraged to promote identification with individual corporate interests and to mobilse support against the collective bests interests of the whole.

This is perhaps also why "dictatorial" China is managing a more strategically effective economic policy than "democratic" USA which eschews all infrastructural investment/regulation in favour of private get rich quick schemes legitimised by an appeal to individualistic "freedom".

The greater problem here, in both EU and USA, is not even legal or institutional.  It is the ingrained popular ideology which equates individual personal interests with individual corporate interests with the best interests of the collective as a whole.  There is no concept of common good any more, except as an emergent property of collective private greed.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Sep 12th, 2011 at 10:30:42 AM EST
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To put it another way, democracy doesn't work when electors and especially economists and bankers have the emotional and collective sophistication of two year olds.

'More for me - less for you' is a spectacularly stupid political position. The fact that it's the default among the investors (i.e. those whose political influence actually counts for something in setting policy) doesn't alter its fundamental knuckle-dragging idiocy.

We don't need financial solutions - we need a fundamental overhaul of left-ish narratives which attack and destroy Hayekian nonsense, without legitimising it as a valid world view first.

Some things are not even wrong - and that includes almost everything the financial classes have been telling the rest of the world since at least the 1980s.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Sep 12th, 2011 at 11:38:20 AM EST
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