Monday 12 September 2011

cogitative bias

The waves of panic in European banking stocks and in the overall American market over EU fiscal discipline and future of the currency-bloc seems to me a bit disingenuous. Battering the creditworthiness of certain big banks or the ability of some member states to adhere to their imposed self-improvement plans. After all, it is in America's interest to promote this particular sort of torment and agony, since it masks its own regulatory and supply-side shortcomings and, moreover, it is in the better interest of the USA to keep the euro over-valued and the dollar weak. Should the euro wane, the American export market would suffer from cheaper European competition, and resources, priced in dollars, would become more dear. Defaults and the perception of defaults might hurt business profit in the short-term but not people, productivity and the marketplace in the long-term, and the policies and mechanisms that will be developed to redress bankruptcy will ultimately translate to a strong and stable European economy.