Liquidity vs. Solvency, or Euro Chatter III

Can Super Mario save the euro? | Hugo Dixon.

This article restates the fact that all the ECB can do is buy time by keeping the system liquid. Buying time in order to finance governments while their economic systems adjust to budget cuts and market reforms is a good idea.

These countries are not reforming their economies. Labor markets are still rigid, and it is very difficult to open new businesses considering all of the red tape. Basically, the current European strategy is to keep the whole dysfunctional system intact while hoping for a miracle to save everything before time runs out. Now, how many Spanish and Italian bonds do you wish to buy for your portfolio?

 

https://dareconomics.wordpress.com/

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s