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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for March 12th, 2012

Market Should Be Assured by Debt Deal: Greek Minister

Posted by WARREN MOSLER on 12th March 2012

Yes, assured that taxing bond holders works to lower deficits. That is, their public debt is sustainable after the PSI bond tax.

If anything, seems to me this kind of talk serves to keep investors away from any euro zone member debt.

Market Should Be Assured by Debt Deal: Greek Minister

By Reported by Silvia Wadhwa, Written by Catherine Boyle

March 12 (CNBC) — Greece has been tossed on the turbulent sea of global markets for almost two years now – but the bond swap deal secured on Friday should reassure markets about the country’s future, Greek Finance Minister and possible future prime minister Evangelos Venizelos told CNBC.

“Now we have a sustainable debt for a sustainable country,” he said. “And now we can persuade the market because we have a new, very important and very concrete argument: the sustainability of the public debt after the PSI (the private sector investor deal).”

“We have a very clear political declaration and position from the part of our institutional partners. We have a very clear statement from the part of the Eurogroup, but also of the Euro Summit. We have the support of the so-called “Official Sector” until the return of Greece in the market,” he added.

Posted in Bonds, EU, Greece | 3 Comments »

Euro zone deficit hawks out in force

Posted by WARREN MOSLER on 12th March 2012

Says it all:

Schaeuble Says Deficit Spending Backers Have ’Learned Nothing’

(Bloomberg) German Finance Minister Wolfgang Schaeuble said that deficit spending is the wrong way to bolster economic growth.

People who believe you can generate growth without pursuing budget consolidation have “learned nothing from the experience of the crisis,” Schaeuble said in a speech in Berlin today.

Germany Turns Up Pressure on ECB

(WSJ) “I hope that the ECB acknowledges its limits and quickly rakes in the money later,” said Volker Kauder, the head of parliamentary group of Ms. Merkel’s conservative alliance of Christian Democrats and its sister party, the Bavarian Christian Social Union, in a Wirtschaftswoche interview on Saturday. Responding to warnings by Brazil about a “tsunami of cheap money” flooding global markets, Ms. Merkel, at the most recent summit of European leaders on March 2, said that she was certain that the ECB had now ended its program of issuing cheap 3-year loans to banks. Merkel also reassured critics that the ECB would not repeat such measures again.

ECB calls for tougher rules on budgets

(FT) The ECB has sharpened its hardline stance on eurozone fiscal policy by urging the still-tougher policing of member states’ public finances. In a report on proposed European Union regulations to monitor budgets better and strengthen the surveillance of countries in difficulties, the ECB makes clear it sees significant scope for further improvement. Among the proposals in the report dated March 7, the ECB suggests the surveillance of countries that run into difficulties in the future should be strengthened by public warnings for the most recalcitrant. Where a country under surveillance is threatening the eurozone’s financial stability, there should be an automatic recommendation that it seeks financial assistance, the ECB says.

Posted in Deficit, ECB, Government Spending | 7 Comments »