“Misery”: A Postscript To “The Euro Is Not Unassailable”

By Marshall Auerback

This memorable scene in Misery is a perfect metaphor for the ECB’s much vaunted bond buying program.

In essence you have two distinct, but related problems: the solvency issue and the problem of deficient aggregate demand.

The bond buying deals with the first, but at the expense of the latter. They should be doing unconditional bond buying, but the Germans would never stand for that politically.

So they’ll still have the same “problem” of fiscal profligacy because as they deflate these economies further into the ground (as a condition of the bond buying), tax revenues will fall further, the automatic stabilizers will go up and the deficits will become larger.

It’s a bit like a patient in the hospital being fed on a drip until he recovers, and then breaking his legs as he emerges from the hospital bed, a la Kathy Bates to James Caan in “Misery”:

The patient, like James Caan, is perpetually “hobbled”, even though he remains alive.


7 responses to ““Misery”: A Postscript To “The Euro Is Not Unassailable”

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