Central banks are trying to get money moving again, but it could all be too little, too late for Europe as the final countdown begins (not as cool as Andrew's musical references, but see what I did there children of the '80s?)

In the Matrix films you get a sense of deja vu when the machines controlling your experience of the world change something. In real life, you get the uncanny sense that you've said and done exactly the same things before as the powers-that-be refuse to change.

That’s what’s going on at the moment in Europe. Today we heard that the world’s central banks have all together opened the taps again. Well, strictly speaking, what the US Federal Reserve has done in tune with the European Central Bank and the Bank of England and the Swiss central bank and others is to slash the rate it charges on US dollar liquidity swaps. Don’t worry if this geek-speak makes little sense to you, it just means it’s a little cheaper for money to slosh around between banks. 

Don’tcha just get that sentimental feeling, like its 2008 all over again? Of course you might argue that co-ordinated central bank action didn’t get us out of trouble then. There are plenty who talk to CNBC who say that everything governments and authorities have done since the financial crisis first reared its head has just been delaying the inevitable.

And the inevitable is very, very ugly. Swathes of failed banks and, beyond that, failed states. 

Ollie Rehn, a European Commissioner has come out publicly to say that there are just ten days left to save the euro. And he’s not just any old commissioner, he’s the guy in charge of economic and monetary affairs. In the next ten days, he believes that Europe either has to come a lot closer together or face falling apart. 

This isn’t the first time we’ve heard this “24 hours to save the earth” talk. British Chancellor George Osborne warned that there were just six weeks left to save the euro… nine weeks ago. 

So perhaps there’s nothing to worry about. Perhaps we actually can fudge, delay, patch over and slosh some more money around until the desperately indebted countries grow their way out of debt and fragile banks find a new sense of purpose and confidence. 

Yes, yes, and perhaps like in the Matrix, we can all learn to fly and dodge bullets if we just think about it hard enough. 

Comments (6)

by Petone on December 03, 2011
Petone

Golly.  Are there really no comments?  Have dozens not being deleted by mistake?

In the world section of this weekend's issue of NZ's second largest city's newspaper, the lead article is about a dog somewhere in the states.  Over the page, the most column inches goes to an article about a cartoon book.  Over the next page, there is another article about about another comic.  There is nothing about the Euro or what it means to all of us.  Nothing at all.  With earthquakes and world cups and elections and cricket and stuff, NZ is very distracted these days. But still, you have to wonder.

Meanwhile, out in the real world..

Paul Krugman, Nov 26   "Even a few months ago I regarded a complete euro crackup as highly implausible. Now I’m having trouble finding a plausible story about how the thing survives."

David Glassner Nov 27  - "The common European currency seems well on its way toward annihilation, and the demise is more likely to happen with a bang than a whimper"

Krugman again , Nov 28    "Future historians will look back in astonishment at the Great Pivot of 2010, in which all the Very Serious People on both sides of the Atlantic– and, sad to say, in both parties in the United States — decided that in the face of high unemployment, weak growth, and low inflation, what the world really needed was austerity. I’m actually having trouble writing about all this; it’s just too depressing."

And then?  If the euro tanks, so does the US, and then so will the rest of the world.  So that last quote of Krugman's has relevance to NZ in more than one way.


Thanks for your article the other week on Trichet and the ECB choir.  Interesting seeing some personal observations to fit with comments like Dean Baker's and that guy Krugman again and again

by Andrew Geddis on December 04, 2011
Andrew Geddis

"Golly.  Are there really no comments?  Have dozens not being deleted by mistake?"

Several spam comments have been very deliberately deleted! But as for the lack of substantive comment - well, Fiona has said it all, really. And it's all a bit too scarey to think about ... given that the last crisis took $7.7 trillion to paper over!

by Petone on December 05, 2011
Petone

Last crisis?  I think you mean the first phase of the current crisis.

And yeah, as Krugman said, $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money

by al loomis on December 09, 2011
al loomis

comment to what end?

i suspect the mandarins are counting the number of angels dancing on pin heads. i suspect the inability of the mandarins to get the numbers to come out black may be related to gross overpopulation of the planet by a species which merely thinks it thinks. i suspect generations to come will be very much smaller in number and size due to wild gyrations in weather and climate, and will pass any idle moments composing curses of the forbears who spoiled our common home.

but i know for a fact there is nothing i can do about it. silence descends.

by danniel on June 29, 2013
danniel

Banks getting money moving again? Are we sure that this is the best thing to do? We're still not on the safe zone with the financial crisis, things are not moving as they should. I read some reports about it on this homestate resource. It really gave me a lot to think about.

by rickk on June 27, 2014
rickk

I think we should quit the apocalyptic predictions and start putting some efforts to bring some stability on the financial market. We all need to gain trust in loans and investing again, I don't see any other way. I intend to use the http://bail-2-go.com/services/ in my best interest; it’s a chance that may not come very often. I hope other people will begin to realize that soon. Recovering from the crisis depends on each one of us.

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