The recent euro summit in Brussels
was supposed to make things better for the European economy. And if you
listen to the mainstream press spin, you hear that a growing
Mediterranean alliance, led by France's new president, Francois
Hollande, Spain's Mariano Rajoy and Italy's Mario Monti, forced Germany
to cave. We are led to believe that Germany has capitulated on things
like less fiscal austerity, the sharing of debt, and direct
recapitalization for ailing banks through the European Stability
Mechanism (ESM). We are also supposed to accept at face value the claim
that the European Union as a whole will work toward some form of common
deposit insurance to arrest the prevailing bank run.
This
is all bunk. But why does that matter to you? Well, recall for an
instance what happened to the global economy when Lehman Brothers went
bust in 2008. The world’s entire credit system froze up. Now consider
the implications for the U.S. if the currency union in the world’s
largest economic bloc was to blow apart. Do you think the fallout might
wind up in your backyard? Economist Simon Johnson recently gave a
warning on the impact on U.S. banks in the event of a dissolution of the
euro: READ MORE
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