Do bail outs work?


             On 2 May 2010 the EU and IMF agreed a large bail out for Greece.  Mr Barroso, the EU President of the Commission heralded this with the words “The eurozone is certainly regaining confidence. Our fundamentals are certainly good”. The Head of the European Central Bank, Mr Trichet, said the package “helps to restore confidence and safeguard financial stability in the euro area”.  The Austrian Finance Minister told us  it “send a clear signal to the markets that Europe is able” to handle the crisis and “minimise the risk” of its spreading. Mrs Merkel said it would mean all other Euro states “will do all they can to avoid this themselves.”

Seven months later we have the same type of crisis in Ireland. The Irish government was pushed into a rescue, probably because the European Central Bank was no longer prepared to make money available to Irish banks on the scale needed. The nervousness created in the Irish bond markets by the criticisms of Ireland’s financial position from its partners in the EU did not help. Much of the rescue package is likely to take the form of a refinancing, shifting the risk of the Irish banks away from the ECB towards the Irish state and the countries lending Ireland the money.

Will this bail out be the last? Have the European authorities now done enough? The danger is that the very public way Ireland was pushed into this bail out and refinancing of the debts could one day apply to another EU state. Markets have got the message that if they push hard enough they can force action, and some EU officials seem to think making more of the national debts EU wide obligations is a good thing, the way to go, as it brings more EU control over the budgets.

The strategy can only work if at the same time someone solves the underlying problems. They are two fold. The first is many EU states spend too much and collect too little in tax revenue. They need faster growth to make bringing these two figures into balance easier. Will they get faster growth from the policy mix favoured by the EU and IMF?  The inability to devalue within the Euro removes one of the normal ways heavily indebted and less competitive states sort out their problems. Euro states have to do it by cutting wages and cutting public spending, which is tough and difficult to do in democracy.

                 The second is there are still weak banks within the EU area guaranteed by states that are themselves short of money. These banks need to be wound down or sold on to new owners with longer pockets. Keeping them as expensive pensioners of the state is not a good solution. The sooner state supported banks are reduced to sustainable businesses, the better. Governments have pledged to protect depositors, but there is no such need to protect all the bad business and businesses within these banks.


  1. norman
    November 22, 2010

    I don’t know if the European implosion is part of some grand scheme to ‘normalise’ wealth in the world or if politicians really are as stupid as they are acting.

    Maybe a little of both?

  2. Will Jones
    November 22, 2010

    Interesting how you say it’s difficult to cut wages in a democracy. Isn’t that the EU and IMF plan, to slowly enslave member states, destroy capitalism such that the EU becomes the EUSSR, a socialist state controlled by a chosen few? Hopefully the people of Ireland will protest against their enslavement and stop this creeping socialism in it’s tracks — the politicians seem to be sleep walking into it!

  3. Tom S
    November 22, 2010

    It looks to me that Merkel and Sarkozy – by first suggesting that all bondholders might have to take a hefty haircut, and then winding back to new ones only – have caused at least part of what is really an Irish default. The view of the markets and lay observers was that this was moving the goals posts once the ball had been struck.

    I’m not clear why we have to cough up £7bn. Everyone is regarding this as a one-off. But it sets a precedent, that is bound to be repeated. The rescue would probably go ahead anyway. And if it didn’t we could mop up any collateral damage at home.

  4. Stuart Fairney
    November 22, 2010

    Memo to Éamon de Valera and all the rest of ’em, when you thought you could run your own affairs, you were wrong! So here’s £7B from (Britain…).

    Who knew schadenfreude could be so much fun?

  5. Nick
    November 22, 2010

    There you go with the lie again. That little lie told by omission. Namely that growth is the solution.

    It’s a lie because it misses off a word. That word is tax.

    The only way politicians can solve the government problem is by taxing more. It’s growth in tax revenues when you say growth.

    Getting the unemployed back to work the government saves £8k pa in benefits – £13k minus £5k HB – plus it gets an extra £2.5k in tax revenue, equals £10.5k total improvement in the fiscal position). The overall saving from returning one million to work is £10.5k times one million, equals £10.5bn.

    Even getting all the 5 million currently not working back doesn’t solve the problem. You need to cut spending over and on top of this by another 100 billion to solve the government mess.

    Here’s one for a starter. Get rid of the Lords. Saving over the this parliament of around600 million.

  6. david
    November 22, 2010

    I see the Tories along with their Libdem jackels are once again selling out the nation. We are scrapping the harriers we can’t afford the aircraft carriers, but we can afford to bail out a nation (the contributor does not seem to like very much ed)

  7. lifelogic
    November 22, 2010

    Cameron in agreeing to the first bail out of the Irish is giving away his weapons before the real EURO war has even started. He will regret it, when it starts he will need as much as possible to get a good deal for the UK – if that is what he actually wants of course.

  8. Brian Tomkinson
    November 22, 2010

    It sounds like ‘mission impossible’ given the strait-jacket of Euro zone membership. Rather than “preventing contagion” as the EU would have us believe, it will merely encourage attention to the next weak link because there are fundamental underlying causes for these countries problems which they will never be able to solve whilst in the Euro.

  9. English Pensioner
    November 22, 2010

    Having got their independence for Britain after a long struggle, the Irish (or at least their government) have decided to surrender it to Brussels, and more importantly Berlin, who control the money. There will soon be a new band of republicans and more bloody conflict fighting for Irish Independence, this time inside the republic or even on the continent. That is, of course, if the English don’t rebel first!

  10. Gary
    November 22, 2010

    Free markets cannot work unless you remove moral hazard. It is one axiom of free markets. If we prevent creative destruction, where bad, redundant, inefficient businesses are not allowed to fail and the entrepeneurs not allowed to fail with them, then we have socialism. In addition, for free markets to work they require an accurate economic price set by the market, including all interest rates. If prices are distorted then so are investment choices. When the govt gives a quango sole monopoly power to set the most important rate, the base rate, and sell it as some virtue, you are a socialist, at best, by definition. So we have to be clear what we want and what we have.

    The banks’ “assets” are currently largely built on property prices. Derivatives piled to the sky, multiples of global GDP, based on the price of property. The UK property market is still at least 30% overvalued by any measure. Maybe more, allowing for overshoot. So, we have to realise now that if we bail out the banks this year, we will be back again and again to bail them out in the future as the property market falls. We have to decide now if we are free marketeers or socialists, and we have to decide now whether we are going to foster moral(immoral) hazard and squander the hard earned savings of the taxpayers. Again and again.

    1. lola
      November 22, 2010

      Seconded in Spades.

  11. HK
    November 22, 2010

    There are many problems in the EU, many of which are obvious and already recognised and, in theory, will be addressed (I don’t assume that they actually will be in practice).

    But surely one of the most troublesome is that the weight of bureaucracy is embedded by treaty into the EU’s very fabric. Regrettably this also applies to the UK.

    Bringing the State under control through spending cuts is just a part of the solution: unwinding years of pointless regulation is the next.

    On that, the Conservatives seem to not have the appetite or – in the Coalition – ability to do what is needed. This is not least because to do so means rolling back the EU: something the Coalition is unwilling to even consider.

  12. waramess
    November 22, 2010

    Certainly the way out of this mess of taxes being too low and spending too high will not be solved by growth. Growth never solved government overspend problems. Increasing taxes or reducing government spending are the only options available.

    Let’s be quite frank about this: since Osborne has lent the savings anticipated by the government cuts to the Irish, he is clearly not interested in cutting the size of government, just in re-arranging the deckchairs on the Titanic. Therefore we are to anticipate yet more taxes on top of the 53 percent currently levied.

    History has shown that people vote with their feet and that in the event of an exodus the best people leave first.

    Let the people at the Treasury watch the migration figures closely in the coming months and try not to dismiss the figures as an aberration for too long

    November 22, 2010

    Perhaps we could remind ourselves of the credentials of Mr Barrosa and Mr Roumpay that their opinions, let alone their actions, should be of such significance to the lives of 500 million Europeans. From all we have been able to glean they are middle-ranking beaurocrats and their thinking and raison d’etre reflect this.

    The opinions of the host and even the contributors to this site carry greater merit. The EU battle is starting to flow in the direction of us, the people of Europe, we believe and Mr Hague is possibly trying, belatedly, to showing his 2001 metal and true convictions?

    1. electro-kevin
      November 22, 2010

      I don’t see why anyone with transferable skills would wish to stay in Britain with such dismal prospects – from people who know how to run power stations to those who know how to mend sewers.

      For them all of these problems can be solved in one deft move. And I would urge them to make it.

  14. Str0ngholdBarricades
    November 22, 2010

    The “bail outs” within the PIIGS is inevitable.

    The market knows that certain countries have been “flagged” and the comments from Frau Merkel, apart from telling everyone that she is not an economist, put a gleam into the eyes of all those traders who can spot a sure winner to bet “short” on

    The issue is about the components of the Euroland, because at the moment it is a b**tard child with no real powers, and certain countries who benefit have no reason to reform their approach simply because it is destroying others. That is what competition does.

  15. Sally C.
    November 22, 2010

    Of course, your incisive analysis also applies to the UK and all of our banks. We cannot allow any bank to endanger our economic well-being or our credit rating . Unfortunately, having bailed out RBS and Lloyds/HBOS, we all know that the government would feel obliged to do the same for Barclays, HSBC and Standard and Chartered Bank. As a beleaguered UK taxpayer, I hope someone is keeping a watchful eye on their activities.

  16. Martin
    November 22, 2010

    A bail out is a short term fix. What is needed long term is for banks to have proper regard for the long term interests of their shareholders. By shareholders I mean long term shareholders.

    Ireland is a horrible case of a property bubble. Some would argue the ability to set interest rate can cure this bubble. Trouble is the rest of the economy catches cold or flu from the high interests rates. I would as an alternative suggest that Capital Gains Taxes be used to bear down on bubbles. I would tax spiky gains heavily and have zero CGT on more modest long term gains.

  17. Richard1
    November 22, 2010

    The root cause of this latest crisis, as with earlier rounds, is the view which European governments are taking – including our’s – that no-one who lends money to a bank or to a country can be allowed to lose money (in nominal terms). Therefore the cost of capital for profligate countries and for incompetently managed banks is far below what it should be – because European taxpayers are subsidising the cost of debt by making it (nominally) risk-free. Maybe this bail-out has to go ahead given the urgency. But the underlying problem must be addressed. If borrowers (and in the case of banks, the shareholders who control the borrowing), whoever they are, are not made to feel the consequences of their actions there is no reason to expect them to change. Everything flows from this – states’ over-expenditure, asset and credit bubbles, even excessive bankers’ bonuses. Time to grasp the nettle for the long term!

    1. Simon
      November 23, 2010

      It would be bad enough if it was just a tax payer bail out of those who lend money to banks but it’s not .

      What possible social benefit do synthetic credit defaults provide ?

      They are a license for insurance fraud and I don’t see how the tax payer can guarantee deposits in banks which are exposed to potential losses through synthetic CDS claims .

      If we all take out insurance policies on Rod Stewarts Lamborghini , even though we stand to lose nothing when he crashes it , why should the taxpayer bear the cost when our underwriter goes bust ?

      Surely capital requirements alone are not enough to limit the liability of the tax-payer’s guarantee of banks .

      Don’t see any alternative to splitting utility and casino banking but it doesn’t look like it’s going to happen .

  18. michael read
    November 22, 2010

    So you would support RBS and Lloyds – up to their necks in Ireland’s debt – being run off and sold?

  19. Socrato
    November 22, 2010

    What about our own banks and the continued threat they pose to our own financial stability? RBS holding £50 Bill of Irish debt after having being nationalised for 2 years doesn’t seem prudent to me. What of our exposure to the residential real estate market? What are the losses going forward given a fall in house prices of 20, 30, 40, 50%? This is what the stress tests should be designed to uncover so that proper action and preparation can take place. Everyone knows the stress tests for European banks were anything but stressful. What does this mean for the probability of further “surprises” going forward? In fact why bother with them at all? The last stress tests which were published in late July (all of 3.5 months ago!) stated that only 7 out of 91 European banks failed – none of which were Irish. For Irish banks to have deteriorated to such a degree, requiring such large amounts of money must come as a major surprise to the authors of the stress tests. So much of a surprise that surely they must be forced to look at their whole methodology and conduct the tests again by using ‘realistic’ assumptions as opposed to ‘fantasy’ or ‘dreamy’ ones. All policy making / investment decisions rely on sound data. It is in the interests of everyone that the real picture pertaining to European banks is made public. What is the true picture of Spanish, French, Portuguese or UK Banks for that matter? And what are the subsequent implications for further bailouts? Surely these are issues which must be raised in Parliament and in the European Chambers.

  20. a cullen
    November 22, 2010

    Mr. Redwood,
    I think two things need underlining:

    1) in a capitalist economic system lending money involves taking risks; the banks that lent to Ireland should also shoulder losses if they have miscalculated the risks (other wise the opposite is occuring and the IMF/EU intervention is introducing moral hazard)
    2) the entire bail out process – in its political aspect – is dangerously undemocratic in undermining the credibility of the elected government in Dublin, weakening further the sovereignty of the Irish nation and foisting further debt on the benighted citizens.

  21. lifelogic
    November 22, 2010

    Do bail outs work?

    If you bail out a gambling addict it will only work if you control the addict and put in place systems to stop their addiction – perhaps by removing their powers to gamble or for a country removing their democracy. This way EU bureaucrats can gamble with it instead and without any tiresome voter control.

    The Irish voters will then have no legal way to address poor governance. This will doubtless lead to other rather more unpleasant ways or addressing these issues.

  22. figurewizard
    November 22, 2010

    With Portugal, Spain and Italy waiting in the wings for their turn, this pressure from the markets will not go away. It is likely that the lack of the devaluation option that you mention is behind this. If this is so then the Euro is ultimately doomed to fail.

  23. Butterworth S P
    November 22, 2010

    “The inability to devalue within the Euro removes one of the normal ways heavily indebted and less competitive states sort out their problems. Euro states have to do it by cutting wages and cutting public spending, which is tough and difficult to do in democracy”.

    Of course the EU is far from a Democracy.

  24. lola
    November 22, 2010

    … by cutting wages and cutting public spending, which is tough and difficult to do in democracy.

    And there you have it. An admission of the weakness of our current crop of politicians. It is not beyond anyone to make the contra statist/corporatist arguements and to rebut the fatuousness of Ed Millibands ‘cuttingtaxes is taking money out of the economy’ nonsense, but very very few do so.

    The voting public is way ahead of the politicians on this, whatever your ‘focus groups’ say. The Voter will accept the assumed hardship caused by cutting public spending. And then he’ll be very pleesantly surpised to discover that far from causing hardship sucha move actually causes wealth creation.

    But unless we get leadership that tackles head on the central deceits of the statists/corporatists we will not dig ourselves out of this mess.

  25. Suze Doughty
    November 22, 2010

    If the great financiers of the world push hard en0ugh they can get more loans guaranteed with taxpayer’s money. The “evil capitalists” have their hands in our pockets because of Gordon Brown’s regulation error, 2nd May 1997!
    Why are the great Socialist Alliances of the world not jumping up and down on behalf of the workers (taxpayers)?
    I object to having to pay for other peoples’ mistakes but feel impotent and unable to do anything about it.

  26. Neil Craig
    November 22, 2010

    Yhe Irish are NOT one of the weak economies, it is simply that they guaranteed thjeir banks. We have a bigger national debt, by GNP share, a bigger deficit, are taking lesser measures to end the deficit & lower per capita GNP. While both countries have a house price crisis ours comes with a shortage of housing as well. If Ireland can be brought down no country in the euro is safe.

  27. Javelin
    November 22, 2010

    Italian banks head the list of credit default swaps where banks are the reference entities – if you add total notional values then nearly 40% of CDS trades are with Italian banks.

    The political froth is distorting the news – politicans should be contacting DTCC ( to find out who traders really think requires risk insurance. CDS spreads are a late indicator of risk – you need to look at quantity of trades to get a leading indicator of risk. All roads lead to Rome.

    1. Javelin
      November 22, 2010

      Just wanted to add – if you look at total notionals for the different sectors you will see 3 trillion (notional/insurance) against financials and 2 trillion against Governments. That is gross not net – a lot banks do bank to back trades. But it does show interest in potential bankruptcies.

      1. Socrato
        November 23, 2010

        nice link. thanks for posting it.

  28. sm
    November 22, 2010

    Do bailouts work?

    Only if they are accepted as useful and fair and are small enough to afford medium to longterm.

    Where is the ‘restructuring plan to back it up, that is workable within the funds committed and timelines.

    Is this not all about banks and resurrecting the financially dead?

    Where are the protections to prevent this, obviously none in parliament which will be used. Also non via the law courts. It really seems that it will take the Germans to rescue us (by pulling out of the Euro) i wonder how long.

    As global interest rates rise who is next up to the plate.

    It seems the powerful and the elite are successful in protecting self interests at the expense of the general taxpayer (any countries taxpayers will do).

    It seems a mad world where the prudent are forced to bailout the imprudent using apparently legal methods. Depreciation of currency ,manipulated low interest rates inflation,taxation, special liquidity schemes, subsidised asset purchase programs etc etc.

    Am I confused are we in a marxist economy.? Democratic deficit seems larger than the UK fiscal one.

    I think we need a series of referendum to get the ‘coalition’ to work in the interests of the people.
    1 ) EU> trading arrangements only 2) Ending of payments to EU from UK taxes 3) Reform of UK parliament – recall powers etc 4) Vote to allow Scotland/ Wales/NI independence. 5) Vote on continuing subsidies to the banks. No more QE for the banks it must go into building real assets in the UK if we go double dip. More renewable energy/ insulation/ grid improvements/nuclear power stations bridges roads in congested areas.

  29. Norman Dee
    November 22, 2010

    I can now see the logic of the EU taking in countries like Greece, Bulgaria, and Romania, etc , when the EU reaches its full maturity and blossoms into the 1 party State it wants to be, countries like these will not have to change much they will just go back to the countries they were before the EU stepped in and lulled them into a false state of security. Its those countries used to liberty and choice that will have to make the big changes.

  30. Richard Calhoun
    November 22, 2010

    This would have been an ideal opportunity to make a statement that we think the Euro needs re-structuring and to put more money in will only help Ireland in the immediate short term if at all.

    We should not make any loans until we have the Euro area re-structured, ie. the PIGS are able to have another currency or Germany does, they present structure cannot continue.

  31. Mark
    November 22, 2010

    The Irish crisis and the Greek crisis are motivated in fundamentally different ways. Greece did not have a property boom: household sector borrowing was only around half GDP, compared with 100% in the UK and 110% in Ireland. Greece’s external debt (BIS data, Q2 2010) of US$532bn divides up as $226bn government, $104bn monetary authorities, and $171bn banks with the remaining $31bn being a ragbag. Greece’s problem is fundamentally about the inadequacies of its government finances. Greece has about 2.5 times the population of Ireland.

    Contrast that with Ireland’s position (BIS data Q2, 2010) before the recent banking guarantees were issued by the government: a total of $2,131bn, of which just $98bn government, $81bn monetary authorities, $824bn banks, $322bn inter company loans and a further $806bn for nonbank financial corporations, nonfinancial corporations, and households and nonprofit institutions serving households. The inter company loans are almost certainly matched by on-lending by the Irish subsidiaries to other overseas subsidiaries, and are likely to be structure to be profitable to take advantage of Ireland’s CT regime and are therefore probably a net benefit.

    The construction boom that accounted for around 15% of Irish GDP during the boom years is of course over, and although there are still some oddities such as the Croke Park agreement to feather bed civil servants, the underlying economy could probably cope with financing the government (whose accumulated debt was around 2/3rds GDP in 2009) were it not for the banking sector and shadow banking that between them add to over $1.6 trillion of external liabilities against which asset values must be highly questionable. Central Bank Governor Honohan has already admitted that acknowledged losses in that sector exceed €85bn or 55% of GDP – and that is just on domestic lending.

    1. JimF
      November 22, 2010

      2 points:

      1 As with Iceland then, banking sector issues are at the heart of the problem, including the imprudent property-related lending. So our Iraid support programme is really yet more bank bail-out money by the back door.

      2 It is a shame your Government didn’t put forward some conditions of its own for this loan. As nearest neighbours, the Irish have been driving their Country away from us toward the Eurozone for some years now. Do we get any preferential treatment by the Irish in exchange for our additional aid?

  32. Kenneth
    November 22, 2010

    By the Eurozone gold-plating sovereign/bank debts the markets know that there is an alternative to restructuring and will push all the harder. Thus train will crash when it comes to Spain, if not before.

    What worries me is not just the stupidity but the extreme nature of those representing the eu quango. However if you are not bounded by democracy I suppose extremism follows.

  33. Lindsay McDougall
    November 23, 2010

    Bailouts are designed for the benefit of the lenders, although they may have miscalculated if a default occurs. The reason that Germany etc are concerned about the fiscal laxity of the PIIGS is that it puts pressure on the ECB to relax monetary policy, which would affect Germany etc as well as the PIIGS.

  34. John P
    November 23, 2010

    Since the EU bailout is 80€-90€ billion (to which we contribute anyway), our £7 billion is insignificant in the scheme of things. This contribution is no more than gesture politics.

  35. Shop Steward
    November 23, 2010

    Life on Mars:

    I for one brothers and sisters applaud this return to doing right by ordinary working folk. The recent return to traditional socialist values by Mr Brown has been carried on by that chap Mr Cameron a true brother if ever I saw one. Rewarding failure and giving huge state handouts to those what is more equal than others is alright by them of us wot is in unions and is hence alright by me. I am just sorry that we cannot give the bankers a whole more of our money. What union is these bankers union anyhow? When is their AGM knees up and do we all get invited? I am looking forward to a good natter over my pint of mild and pie with them. Up the workers!

    Did I blink and did free markets disappear overnight? Did I get run over and am I on life support dreaming that I am in the 70s?

  36. theyenguy
    November 24, 2010

    By Leaders Announced Agreement, Ireland and its banks received a seigniorage bailout from The EU, IMF, and the UK on November 22, 2010. This lending establish the UK as a fully integrated part of a European region of global governance, and disannulled the sovereignty and nationhood of Ireland.

    Jean Claude Trichet, Dominique Strauss-Khan and David Cameron are now Ireland’s sovereigns and seigniors. Their supranational budget rules impose regional global governance, specifically economic governance, upon Ireland. The bailout clearly constitutes intensified fiscal federalism in the Eurozone, and unifies not only Ireland, but the UK into a European region of global government. The Leaders’ Agreement waived Ireland’s national sovereignty. It is no longer a sovereign nation state. This is simply part of the vision of the Club of Rome in 1974, when it called for the creation of ten regions of global governance. Ireland’s budget is now directed by others from outside and this means more internal devaluation, that is more austerity.

    International Monetary Fund chief Strauss-Kahn, in a speech at the European Banking Congress in Frankfurt, Germany, spoke of sovereign crisis according to Phillip Aldrick of The Telegraph. The crisis is now held in abeyance, it has not been abated.

    There is a trigger for all things economic. It was German Chancellor Angela Merkel’s call for a Permanent Crisis Mechanism, a commonly accepted tool which would be used in the event of a sovereign default, as Econogirl reported on October 28, 2010, that lead to a blast higher in periphery European sovereign debt interest rates in November 2010, as well as a run on Ireland’s banks, that brought about the negotiation of seigniorage aid for Ireland.

    I ask why would Mrs. Merkel suggest such a thing? I believe it is because the Germans, knowing that they have a strong and export productive economy, can do without a common currency. The announcement of Germany to push for the Permanent Crisis Mechanism, together with the Basel III requirements is the kiss of death for all of the all European Financial Institutions, EUFN, and accounts for the 4.5% fall in Banco Santander Madrid, STD on November 22, 2010. Lending via European banks died, November 22, 2010 with the announcement of a Ireland bailout agreement.

    In as much as Mr Strauss-Kahn says there is a sovereign crisis, I believe a sovereign will arise to address the crisis. Perhaps this person will be Herman van Rompuy.

    And I believe the sovereign will be accompanied by a seignior, an old English word meaning top dog banker who takes a cut. He will provide credit seigniorage to all European Financial Institutions and corporations and persons residing in the currency union.

    And in so doing he will command great authority. An example of such authority is EU’s Economic Affairs Commissioner Olli Rehn’s October 2, 2010 statement in FT article, Ireland May Have To Sacrifice Low Tax Status: “In the coming decade, it’s a fact of life that after what has happened, Ireland will not continue as a low-tax country, but it will rather become a normal tax country in the European context,” he said.

    I believe the seignior (perhaps it will be Mr. Rehn), will pave the way for a global currency system, to replace all current currencies, as they expire in the current bout of global debt deflation that commenced that November 5, 2010, when the currency traders sold most of the world’s currencies, as the bond vigilantes sustained the Interest Rate on the US 30 Year Government Bond above 4%, causing the US Dollar, to rise.

    Evidence abounds, and is clear, cogent and convincing that fiscal seigniorage has failed in Europe. As the end of credit approaches, then a Supra Government, of the Sovereign And Seignior, will be the Federal Government of Europe, and sole fiscal and credit seignior. This triune power will be the first, last and only provider of credit in the Eurozone.

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