Eurozone Crisis Shows That Imbalanced Trade Leads To Disaster

By Peter Boone and Simon Johnson The bailout of Greece, while still not fully consummated, has brought an eerie calm in European financial markets.  It is, for sure, a massive bailout by historical standards.  With the planned addition of IMF money, the Greeks will receive 18% of their GDP in one year at preferential interest rates.  This equals 4,000 euros per person, and will be spent in roughly 11 months. 

Report Shows Netherlands Would Benefit by Leaving Eurozone Inquiring minds are reading a 73 page detailed report The Netherlands & The Euro that explains country by country why Italy, Greece, Portugal, and Spain are going to need lots more money, and the Netherlands and Germany will end up footing the bill.

Portugal, which is entering the last year of a three-year European Union aid program, will likely need further help from Europe at a time when core countries in the region, such as Germany, are fast losing enthusiasm about providing financing to ailing peripheral nations.   The most likely solution to this problem, according to analysts at Credit Suisse, isn’t a second bail-out but instead that European institutions offer Portugal a credit line until the country can make a full return to debt markets.  

Time after time, it appears, in Europe 'beggars can be choosers'. That is, it seems, until Cyprus when the Merkel hammer was brought down and a new 'template' to avoid German taxpayers implictly taking on the burden of southern European largesse. The initial pro-Euro indifference to the bailouts has turned increasingly to resentment in Germany - and as we noted here, the rise of anti-Euro parties in the very heart of the political project.

The eurozone was supposed to equalize trade and interest rates. The Maastricht Treaty supposedly ensures the free movement of goods, capital, people and services. Tensions were supposed to drop. Instead, the eurozone has been a complete failure. Eurozone Complete Failure

By Simon Johnson On the face of it, Ireland seems poised on the brink of default. Its debts are very large relative to the size of its economy, most of this money is owed to foreigners and – unless there is an unexpected growth miracle – the country will struggle to pay its debts in full for many years to come.