Economics and similar, for the sleep-deprived
A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?
Update: seemingly not
Update: Oh yeah!
Friday, November 04, 2011
The economic equivalent of
war humanitarian intervention
I was joking about this on Twitter last night but I've looked it up and I think that it would work, legally and economically. The idea is that the USA doesn't actually have to restrict itself to moaning from the sidelines about Europe's inability to get its act together.
The ECB and Fed have mutual, unlimited currency swap arrangements in place. These were intended to be used for alleviating European banks' shortages of dollar liquidity, but there's nothing legally mandating that they can only be used for that purpose.
So, the Fed could carry out, under its programme of quantitative easing, an operation whereby it created US$500bn of new money, swapped it with the ECB for EUR300bn, used the EUR300bn to buy the entire outstanding debt of Greece and then tendered it back to Greece at a 99% haircut.
The only reason this can't be carried out is that it would represent an absolutely massive unilateral trampling over the Eurozone's national sovereignty. But the USA explicitly maintains a foreign policy doctrine under which it is allowed to intervene anywhere, at any time, unilaterally, in defence of what it considers to be its vital national interests. Doesn't it?
this item posted by the management 11/04/2011 07:43:00 AM