When U.S. authorities in 2008, was faced with financial panic, their first thought was to ****** as much liquidity into the system. The major challenge in their opinion, was to provide access to credit, rather than the quality of the loans.
It just so happened that they were mistaken, and American banks faced a solvency crisis. On their balance sheets hanging assets, not even worth the paper on which printed financial statements. Accordingly, for the recapitalization of financial institutions, Congress approved a 700 billion dollar fund TARP.
Now fast forward in time by 19 months in advance, and space - across the Atlantic, where European leaders are faced with its own sovereign debt crisis, panic in the financial markets and a loss of confidence in the euro. Their actions? Become debtors more money!
Apparently, the heads of the EU in the lectures on the TARP plan, nodding at the last desk. It is not to recapitalize the sovereign state, taking and increasing the amount of debt issuance. According to Charles Weinberg, a leading economist at High Frequency Economics in New York, it's like to give money to America's banks and hope they will increase the bulk of their loans. "Lending to the European states, which can not service its current debts, not make them creditworthy," - says Weinberg.
The approach chosen by European governments, is erroneous, because the allocation of funds in Greece would only increase the national debt figure, which last year amounted to 78,7% of eurozone GDP. The rule "if you were in a hole - first stop digging", apparently not translated into European languages.
