Well, it's been a week or two since the last time the EU "saved" the Euro, so we were all due another thrilling chapter in the saga.
"Blazing Saddles," yes. Mel Brooks' classic Western satire is required viewing to understand the latest episode in the Euro-salvation drama, in particular the brilliant "hostage"scene with the late and very funny Cleavon Little playing beleaguered black Sheriff Bart in the all white town of Rock Ridge. Substitute Greece, Spain, France, Portugal, or Italy for Bart. Substitute Germany for the mayor and citizens of the town. Reflect on Bart's words after he avoids being lynched by taking himself hostage and threatening to kill himself, "They are so dumb!" That's the latest "rescue"of the Euro summed up.
As we have noted before (here, here) the insistence on "saving" the Euro is destroying Europe's economy. The Euro has made low-productivity Greece, Spain, Italy, Portugal, and France as expensive as high productivity Germany. It has encouraged wild spending, and phony bookkeeping among the southern Europeans. The political motivations behind the Euro have encouraged those who should know better, e.g., Germany, to turn a blind eye to these shenanigans and just pay the bills. One would have thought that German patience with being stuck with the bill would have come to an end. Apparently not. The next step by the spenders is to have European bonds issued at a German interest rate so as to lower borrowing costs for the profligate ones. The resolve of the Germans, who quite rationally have resisted this, is cracking under the pressure of the threatened suicide by their Cleavon Little-like neighbors. We see now that the Germans have agreed to allowing the debtors' banks direct access to Eurozone funds and to what is essentially a banking union that will allow ailing banks direct access to those funds. This is the first step towards Germany having to guarantee the debts being run up by Spain, Italy, Portugal, France, and Greece. The MSM in Europe has hailed the victory over the German opposition to "pro growth" strategies. This cannot last much longer.
Mel Brooks is owed royalties--in Canadian dollars, please.