"...The irony of the Maastricht Treaty is that it did temporarily bring about the currency stability everyone wanted. However, that currency stability came at the expense of something far worse - inherent interest rate instability (coupled with heightened fiscal instability).
It just took some time to play out.
Now, instead of attempting to defend untenable currency targets, the ECB, the Eurocrats, and the IMF all have their hands full attempting to maintain untenable interest rate targets. With yields soaring in Greece, Spain, Italy, Ireland, Portugal, and Belgium in relation to Germany, the Troika has failed.
To alleviate interest rate concerns and fiscal instability caused by the Maastricht Treaty, politicians now openly discuss breaking up the Eurozone, which of course will immediately kick off a full-blown currency crisis in various countries.
Interest Rates on Government Bonds Go Full Circle
click on chart for sharper image
Chart from Spiegel Online
When the currency crisis happens and the Eurozone breaks up as is inevitable, Europe will have gone full circle on both interest rates and currencies, with politicians chasing their tail every step of the way."
at http://globaleconomicanalysis.blogspot.com/2011/11/european-erm-1992-replay-same-problems.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
It just took some time to play out.
Now, instead of attempting to defend untenable currency targets, the ECB, the Eurocrats, and the IMF all have their hands full attempting to maintain untenable interest rate targets. With yields soaring in Greece, Spain, Italy, Ireland, Portugal, and Belgium in relation to Germany, the Troika has failed.
To alleviate interest rate concerns and fiscal instability caused by the Maastricht Treaty, politicians now openly discuss breaking up the Eurozone, which of course will immediately kick off a full-blown currency crisis in various countries.
Interest Rates on Government Bonds Go Full Circle
click on chart for sharper image
Chart from Spiegel Online
When the currency crisis happens and the Eurozone breaks up as is inevitable, Europe will have gone full circle on both interest rates and currencies, with politicians chasing their tail every step of the way."
at http://globaleconomicanalysis.blogspot.com/2011/11/european-erm-1992-replay-same-problems.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
