At the nightmare he once dreamed of blissfully:
"The euro must break up
Or else we must take up
The topic of joining fiscally."
Among the 9 Economic Myths deconstructed by Cullen Roche in his Pragmatic Capitalist blog is that of the euro: specifically, that the euro has been saved by the ECB's LTRO (long-term refinancing operation). Euro-zone banks have borrowed a net €520 billion of 3-year LTRO loans, which the ECB hopes will encourage liquidity and lending among the banks in its member countries. Unfortunately, this is another example of can-kicking. Says Mr. Roche:
The problem in Europe is simple. Because none of the countries are autonomous currency issuers, they all suffer from solvency constraints. They can’t print euro without the approval of a foreign central bank, in essence. So, unlike the USA, they can “run out of money”. This makes for frightened bond investors. The problems all arise out of the [intra-European] trade imbalance, which essentially forces the core to lend to the periphery to maintain growth. This is only sustainable up to a point and that point has been reached.Hat tip to the Reformed Broker, Josh Brown.