Open Europe relates The WSJ argues: “Using the ECB to buy debt, only to tender it to governments at a discount, would also establish a moral hazard that the central bank would soon come to regret. If the ECB can be made to take losses on Greek debt, why shouldn't Ireland , or perhaps Portugal , benefit from the same generosity? […] This latest proposal merely highlights how dangerous it was for the central bank to involve itself in manipulating the government-bond market in the first place. For Frankfurt , the lesson is to beware of Greeks bearing bonds.” And on his WSJ Real Time Brussels blog, Stephen Fidler notes that expanding the European Financial Stability Facility, EFSF, through mixed financing by AAA and lower-rated members “means non-prime borrowers such as Italy would have to raise real money to fund the bailout.”
Issuing debt to rescue debt only monetizes the original debt, and causes debt deflation, resulting in loss of value in sovereign debt, BWX, corporate debt, PICB, and stocks, VGK, the European Currency, the Euro, FXE, as well; and will eventually cause a rise in food, FUD, and cooking oil, FUE, agriculture, RJA, commodity prices as investors seek safe havens from rising interest rates
The European Union in issuing debt through its EFSF monetary authority has started a new era of fiscal federalism and economic governance; it has created a debt union and a common treasury. The EFSF in issuing debt has further strengthened the Eurozone as a region of global governance as called for by the Club of Rome in 1974, has impinged upon and impaired the debt sovereignty and debt seigniorage of sovereign nation states, and by providing seigniorage, and has established the precedent of a sovereign and a seignior to establish money good and provide for moneyness.
Open Europe relates: “German Professor Markus Kerber is the initiator of a lawsuit at the German Constitutional Court against the bailouts of Greece and Ireland and that full write up of the event can be found here. The Professor expressed some profound criticism of the European Central Bank’s policy to buy up government bonds on the secundary market – bluntly calling it “illegal” along with the bail-out package itself. He predicted that “the euro will fail, it’s better to face that”.”
Open Europe communicates also that Express delivers 373,000 signatures to Downing Street calling for EU withdrawal. With the help of Labour and Conservative backbench MPs, the Express yesterday delivered a petition with 373,000 signatories to Downing Street calling for the UK to withdraw from the EU. Open Europe’s Stephen Booth is quoted by the paper saying, “The UK needs to take a much more direct approach to fighting for radical reform in Europe, without which frustration with the EU will only grow.”
And Open Europe relates that Political Commentator Patrick O’Flynn argues, “The Prime Minister, under pressure from his Lib Dem allies, has abandoned any idea of repatriating powers from Brussels and appears to be after a quiet life. But there is no chance of that.”