Home > ECB, EMU governance, sovereign debt > Mr Weidmann and the Classics

Mr Weidmann and the Classics

Bundesbank President Jens Weidmann strikes again. In a tribune on today’s Financial Times he argues that to break the sovereign-bank nexus, the only solution is to impose, through regulation, an extra burden on sovereign debt holdings (he is gracious enough to concede that a transition period could be accorded).
I find this fascinating. Germany is the country that most opposes a fully fledged banking Union, that to be effective would require common deposit insurance, a crisis resolution mechanism, and I would add, an enhanced role of the ECB as a lender of last resort.
This would break the vicious circle between sovereigns and the financial sector, without denying the special role of banks and credit in a modern economy; nor, also relevant in today’s situation, their capacity to finance governments. Weidmann stubbornly refuses to see any specificity to banks, and has nothing else to propose than imposing by regulation what de facto is a downgrading by default of sovereign debt.
Mr Weidmann is a talented economist. He should maybe go back to Bagehot’s Lombard Street

  1. October 4, 2013 at 10:55 am

    Inasmuch as the sovereignty of nation states is failing, on the collapse of fiat money, beginning with the Emerging Market Currencies, CEW, and Emerging Market Bonds, EMB, nannycrats will increasingly meet in summits and work groups, to renounce national sovereignty, and to establish regional sovereignty, where monetary, fiscal, and economic policies will be directed by statist public private partnerships of banks, businesses, labor organizations and governments, all for the goal of regional sustainability.

    The IMF is showing the way forward, as the centerpiece statement of its position paper More Fiscal Integration to Boost Euro Area Resilience, dated September 25, 2013, calls for better oversight of national policies and enforcement of rules: “Going forward, reinstating fiscal discipline and reviving market discipline may require stronger involvement of the center in national fiscal decisions.” A One Euro Government is coming soon, it will be a United States of Europe, with a great democratic deficit. The periphery nations, will exist as hollow moons revolving about planet Brussels and planet Berlin. While Greeks cannot be Germans, all will be living as one, in common debt servitude to centralized task masters, such as Jenz Weidmann, President of the Bundesbank, as they direct a Eurozone Fiscal Union.

    Liberalism featured trust in the world central bankers for investment gain. Now in authoritarianism, specifically out of waves of economic and political turmoil in the Mediterranean Sea nation states of Portugal, Italy, Greece, and Spain, people will come to trust in the word, will, and way of sovereign regional leaders, that is statist nannycrats, for regional security, stability, and sustainability, as communicated in bible prophecy of Revelation 13:3-4.

    Doug Noland penned that liberalism as the age of wildcat finance; an epoch where bankers of all types fiercely strived to outdo one another to generate the greatest investment results, and where Ben Bernanke fathered credit easing.

    But now with Jesus Christ, operating in dispensation, that is the administration of all things economic and political, as presented in Ephesians 1:10, the world has pivoted from liberalism to authoritarianism, where Angela Merkel fathered debt servitude with Greek Bailouts I, and II, and where she in calling for More Europe, laid the groundwork for a soon coming One Euro Government.

    Authoritarianism is the age of wildcat governance, where leaders bite, rip and tear one another apart, in their struggle to become top dog leader; these will increasingly rule regionally, in diktat.

    Peter Schwarz of WSWS reports on the emergence of wildcat goverance and its diktat in article Italian Government Survives Confidence Vote.

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