He said the likelihood of a bank run in other periphery countries was limited, including in Greece.
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We are now talking about the political stability of two of the most dominant of the Eurozone periphery countries.
It would leave Germany with large unenforceable claims against the periphery countries.
And propping up countries, in the dire circumstances in which the periphery countries now find themselves, is not so very different from propping up governments.
Rebuilding their competitiveness within the eurozone is hard enough for the periphery countries, without the added disadvantage, in world markets of a strong exchange rate.
There is also disturbing evidence that the weakness in the so-called periphery countries has spread to the 'core' - not just France, where the index reflecting new manufacturing orders fell to its lowest level since 2009, but also to Germany.
There are other strategies that could work, most notably relative deflation, or rather lower inflation in the periphery countries, higher inflation in the core, so that the relative costs and prices come into line but do so in the context of general inflation.
Here's the economics bit: if those periphery countries are going to become more competitive, without a currency depreciation, it follows that their domestic prices and wages need to fall, relative to German ones, and their domestic consumption needs to grow more slowly than their net exports.
It was obvious that the continent as a whole was slipping back into recession (to say nothing of the periphery countries suffering deflation of their economies) but the ECB has this Teutonic insistence upon raising interest rates in order to squeeze inflation out of the system.
Germany and other richer eurozone countries are reluctant to provide more taxpayer-funded bailouts for weaker eurozone members, after the debacles in Greece, Cyprus and some other "periphery" countries.
At what point does the insolvent periphery include so many countries that markets lose confidence in the solvency of the shrinking core to bail them out.
In particular, attention has returned to sovereign credit risk, particularly in the eurozone and its periphery, where weaker countries, like Greece and the more indebted of the Central and Eastern European countries, are under pressure.
And why Germany is also growing so much faster than the countries on the periphery.
If German prices rise by 3% a year and those in the periphery are flat, then countries like Spain, Portugal and Greece will gradually improve their costs relative to Germany.
The European economy remains troubled even as structural reforms are making countries become more competitive (note the recent improvements in the current account balances of the countries of the periphery).
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In both, a crisis of excess debt developed, in the 1920s created by war and today by a decade in which the new common currency generated huge financial flows from Germany and other surplus countries to deficit countries of the euro-zone periphery.
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However, the EUR optimists seem to be disregarding too easily some of the harsh realities of European periphery data revealing that the economies of most debtor countries are still contracting, and Germany alone cannot be the sole supporter.
That would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments.
Some countries, particularly the embattled economies on the periphery of the euro zone, have no choice.
EU, the authors split selected member countries into two groups: the core and the periphery.
What's more, a European fund would not have to be big enough to deal with simultaneous deposit runs across all of Europe but only with ones in the periphery, since money would presumably flow to banks in core countries such as Germany.
For now, the euro zone's core countries are likely to do better than those on the periphery.
Elsewhere, such as in Europe's periphery, the scale of budget tightening will cause such economic damage that the countries' debt outlook will darken rather than brighten.
Note that the European Central Bank rode to the rescue of the European Union periphery by printing tons of money and by purchasing the debt of the above named countries.
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