City Journal Spring 2014

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Spring 2014
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Nicole Gelinas
Europe Still Doesn’t Get It « Back to Story

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the euro never was a financial play, it was a moral/social one. Europe is bankrupt morally so, is this situation surprise to anyone? Really?
I would like someone, such as the author NG, to provide some factual information on a subject which his article raises and has been troubling me for years.

Of course the standard liberal capitalist answer to the banks having got themselves into trouble lending to Greece, Spanish property developers etc. is that the banks' shareholders are wiped out, or 99 per cent wiped out so they have a small additional incentive to help with recapitalisation. I would like to know how far this has happened and what are the money sums involved?

Of course (I suppose) their insolvencies go much further than their equity capital base so many institutional lenders to the banks have to take a big haircut as if the banks were being seriatim put into liquidation and wound up. What would the figures be on that?

This model solution relies on the banks (or most of them) being refloated so as to form a competitive, and much chastened, commercial banking sector, after solvency is restored. Presuming that the banks capital has already been restored to whatever the latest version of international banking regulation requires the taxpayer gets some sort of return by reason of the newly issued bank shares selling for perhaps three times the liquid capital required by the bank. Figures anyone?

B. Samuel Davis June 22, 2012 at 3:14 PM
I read this article carefully and with equal measures of sadness, relief, and that German word that means pleasure in another's troubles.

In this era of daily, sometimes hourly news cycles, it seems that there is often an assumption that history began last week. In short, does anyone recall how the 'new' Europe was going to be a world class powerhouse that would be the entity dominating the 21st century? This was the talk of the 90's once Japan, which had replaced the Soviet Union as the latest challenger to American domination (a domination that is a constant source of irritation for the elites), had run out of steam and more or less collapsed.

With respect to Europe's run as a superpower - didn't happen, did it? A few paragraphs could be written here on how the 'new' Europe was given its comeuppance and fell apart on the rocks of that old saying (to mix the metaphors) "you can't get something for nothing." The article correctly points out that the only way the 'new' Europe would ever work, or rather the reason, it didn't work, is that you are dealing with separate nation-state and their individual cultures. Some countries in Europe are like the ant of that old fairy tale, but too many played the grasshopper for the idea of a unified Europe as the new #1 to take off.

The other reason for the failure of the European Union was - perhaps - China. The inability of...well..the entire world to get a handle on China's ability to out compete via a combination of currency manipulation and protectionism may have been a cause here, although I'm not sure about that. Certainly, Japan's policy of protectionism didn't do it good in the long run. Whether China will the one to topple the United States from its high perch remains to be seen, although it looks rather like the USA will fall on its own. Time will tell.

In any event, once again the world media's trumpeting of another power to challenge the United State turned out to be -- not much at all. Behind it was, of course, the usual anti-Americanism of those who can't wait for the opportunity to feel schadenfreude.




Germany will allow itself to be used to subsidize irresponsible financial governance only to see its own financial health deteriorate. Eventually the healthy economies in Europe will be reduced to the level of the unhealthy ones. All will become basket cases being reduced to third world status. Merkel simply isn't up to the task of leadership. Too bad!
Spain and Ireland had spectacular housing bubbles. In that respect, they resemble our problem. Greece just spends too much. We have that problem, too. It's interesting to read again Theodore Dalrymple's piece in this journal about corruption in Italy. It seems the bill has finally arrived.
Some of these worthless countries---especially greece---deserve bad news.
At the center of the problem, unremarked as far as I can see, is that the climate in Greece is turning hostile. The physical climate. Greece's olive orchards have been ravaged by forest fires in recent years.

Greece has no mfg economy, no amber waves of grain. She has tourism and Mediterranean agriculture. The Med Ag is failing as the Sahara moves North, and the tourism is failing as public order retreats North.
"What would Jesus Do?"

get into the Banks aka Temples, and throw the bums out, but then the Governments would do what they have always done, Crucify the Son of a Bitch! I am not a Christian, Jew, Muslim et al and maybe that is the problem. Fear doesn't drive me. Look to the Church of Rome and their banking practices, wow! Ethics, NOT!
Clinton Stockwell June 21, 2012 at 9:59 PM
City journal or International Economic review, what does this issue or how does the issue related, as I suspect it does, with urban economies in Europe and elsewhere This article might be more appropriate in Foreign Policy Magazine.