Wednesday, July 8, 2015
Michael Hudson — EU Infrastructure Undermines Sovereignty
Strangely, Michael Hudson conflates the European Union and the Eurozone. But it's a good analysis of design failures in the construction of the EZ. It's the common currency arrangements that undermine sovereignty and therefore democracy in the countries that gave up their own currencies and signed up for the euro. Members of the EU that are not members of the EZ don't have the problem.
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4 comments:
He's "too busy" these days to get it right. ;)
Hudson's idea of an ideal system operation:
RUN >> DEFAULT >> RESET >> RUN >> DEFAULT >> RESET >> RUN >> DEFAULT >> RESET...
He must have his microwave, coffee maker, blender, food processor, waffle maker, toaster ... all plugged into the same kitchen outlet and has to keep running over the the panel to reset the breaker every time he makes breakfast....
All Michael Hudson is saying is that it is not outside the wit of of human ingenuity to re-engineer the creditor/debtor relationship so that negative shocks are not predominantly concentrated on the debtors. This I believe has been touched on by Mian and Sufi in relationship to house mortgage debt the principal financial investment for most individuals and households. Being underwater with your mortgage when house prices collapse is directly down to financial law that allows the lender not to take a financial hit as well as the borrower. In theory same could apply to government bonds repayment related to government revenue collapse. Could inject some discipline into the banking fraternity but highly doubtful since short-termism or hit-and-run dominates as Bill Black persistently argues.
I find your (Mike and Matt) remarks quite petty). Why the snide remarks when someone is even slightly "out of paradigm?" Isn't Hudson essentially right? It seems to me he is head and shoulders above most analysts.If you are so wise and infallible, what is your viable "solution" for the Greeks?
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