Tue Jan 11th, 2011 at 03:13:06 PM EST
I wrote down this great (oh yeah great) comment in the Krugman site regarding the Portugal DOS attack.
Being an Spaniard you may guess how sad I am watching the end of the euro unravel.
So, only a small point, it is impossible to deflate when you have a private debt load as Spain has... plus, wages representing only 15% of total production costs (please , do check it). So deflation should come by a strong reduction in capital capture of the revenue stream. Tell me how you are going to convince the rich industrial capitalists in Spain to do it, and if they do it, how are they gonna pay the huge debt they have.
We should default private debt and get out of the euro unless the ECB does not start buying large /huge amount of Spanish (and Portuguese and Irish) public debt now, so that the private debt can be paid via large amounts of public demand for Spanish products... that , of course would break roughly a hundred of European laws, but NO, it will not create inflation (we are in a liquidity trap for Xsakes).
And I close with a question, When Germany forces upon us a destructive monetary policy. Is Germany stupid or evil? I bet evil. They want Europe to be their appendix. Germany in a tower surrounded by destruction.
Nice comment (my ego would say), but I am not sure I am right. I would really like to know what is your take. Is German pure and plain evil using a monetary policy as a "destruction of competition" tool (see the example of Ireland), or it is just plain stupid and has not thought thoroughly the consequences clearly, as the new purchase of bonds by the ECB shows.
So being 10 a pure evil where "Germany is playing chess trying to knock out all Europe so that they can be the unique geopolitical player" and 0 being "Germany is scared of the past, they believe hyper-inflation religion and would destroy, eliminate and erase anything which can affect a euro-gold monetary policy" stupid.
What would your german grade be?
I really would like to know.
Note: By Germany I obviously mean the average masters of the universe with German residence. And W.Munchau does not count even if he has a FT column and lives still in Germany. Any other German who is neither stupid nor evil does not count either. We know there are a bunch of them.