Goldman blogs at the Asia Times:
As I said on Larry Kudlow’s CNBC program Nov. 21, France and Germany need a new Maginot line somewhere around Nice.As Merkozy trace Hannibal's route in reverse....they hope to find time to regroup at the line of the Swiss National Redoubt.
Germany’s otherwise sober and intelligent Angela Merkel is in flight forward, as I warned in a Nov. 11 Macrostrategy report (still available to the public, but soon to be restricted to paying customers). Germany is simply not big enough to bail out the backward economies of southern Europe, as today’s undersubscribed Bund action should make clear. The right solution is to throw the laggards under the bus, and draw the line at the Alps, ring-fencing France and Belgium.
As I explained in the cited report, you simply can’t do very much for a country a third of whose economy is black market. Italy and Greece are comparable to Turkey: the state simply doesn’t see one in three transactions. The entire political culture down to the capillary level, down to the smallest Sicilian village, is thoroughly corrupt.
And southern Europe is dying a slow demographic death as well. Long term, the budget problems of Spain, Italy, and Greece are insoluble, so you might as well put them through bankruptcy now.
The political culture of those countries is corrupt from top to bottom. To get rid of the fleas, you have to kill the dog, that is, starve the state. The obvious way to do this is to auction of all important state assets as well as the notionally-private banking system to foreigners, so that the politicians will loose access to the fountains of corruption. To make this perfectly clear: what is required is not an austerity program, but a thorough-going revolution in economic and social life, a transformation of the way of doing things.
The politicians will never agree to this, because any workable solution begins by destroying their livelihoods....MORE