|100,000 Mark note: hyperinflation|
From the beginning, the obvious solution to the crisis - as many economist have been loudly shouting - is for the ECB to weigh in.
As the central bank, it is the gatekeeper of the eurozone's money supply. So it can simply create out of thin air the cash that is needed to rescue Italy.
If the ECB stood unambiguously behind Italy, by making an unlimited commitment to buy up the country's debts, then investors' worries about whether those debts can be repaid should evaporate.
Of course, printing money does not solve the longer-term problems that got Italy (and other southern Europeans) into their current pickle in the first place.
It does not cut Italian wages to more competitive levels. It does not make Italy's debts or overspending disappear. And it does not break the albatross-like stranglehold of vested business interests on much of the Italian economy.
But it will help. Because the longer the crisis goes on, the more that business confidence, consumer confidence and confidence in Europe's banks collapses, and therefore the more collateral damage is done to Europe's economy.
And a recession right now will make Italy's economic problems even harder to solve.
Exactly. Precisely. When are they going to get it?
Read the whole article here. It's good.