Tuesday, May 11, 2010
Bailout solutions potentially have long term effects
Bloomberg: Germany, France May Hurt AAA Ratings in ‘Ponzi Game’
Top- rated euro-area states may compromise their AAA grades by standing behind the debts of weaker members with their 750 billion-euro ($955 billion) stabilization fund.
The package is “making debt profiles deteriorate, potentially damaging the ratings of core sovereigns,” said Stefan Kolek, a strategist at UniCredit SpA in Munich. “It’s a kind of Ponzi game at the highest level.”
History will show if the current 'trend' of bailouts will have been the right decision. Unfortunately the powers that be, will be long gone by then, so they can state with authority that bailouts are 'right course for action' and 'essential for stabilty'.
Posted by c'mon correction @ 11:51 PM (411 views) Add Comment
1 Comment
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1. paul said...
It’s also part of a process that is increasing so-called moral hazard “exponentially,”
Sounds familiar.
We have inflation figures being published today and those will undoubtedly show that inflation has soared again, and yet again, the MPC has blithely ignored it in the hope that they might get away with stoking the housing market once more.
In fact, today we will see the MPC's true colours. Have they been recklessly ignoring inflation all these years on their own or under the kosh from government? Now that the "government" is in disarray, any kosh will be off.
The long arm of history should be reaching over and down, clenching the balls of the MPC and squeezing today.