Today, I thought I would provide some background to the Euro crisis to advance some understanding of why the conservatives in Europe are advocating highly destructive solutions to their crisis. So I went back to some notes that I have accumulated over the years to try to put the sort of nonsensical fiscal rules that are now being proposed by very influential German economists into some sort of context. What you will see is that the context doesn’t in any way help to justify the rules. They are crazy by any reasonable assessment. But at least you will see them in a wider context. I hope.

The ECB is embarking on a major construction project to erect new building at the east end of Frankfurt, which will be completed on current plans by the end of 2013. It will replace the old wholesale market which supplied fruit and vegetables to Frankfurt and surrounds. One suspects the health of the citizens was better served in this former land use. I wonder what they will do with the new building when the Eurozone collapses. Perhaps it could be a nice retirement village for the executives who will be looking for something to do.

New York Times columnist and Nobel Prize winner Paul Krugman occasionally brushes up against an understanding of how the macroeconomy works. Some people actually have said to me that he does get it but chooses for political purposes not to disclose a full understanding of the basic principles of Modern Monetary Theory (MMT). Well in his most recent column – We’re Not Greece – published May 13, 2010, I think you can conclude that when left to his own devices he doesn’t have a clue about what is really happening in the macroeconomy. So today, we are exposing his mainstream (neo-classical) keynesian nakedness – he is now naked and without clothes.

Three people are dead in Athens as the people turn ugly against an even uglier ideological push against their welfare. The EMU is now facing an untenable future. Senior policy makers within the EU are now lecturing the UK about the need for harsh fiscal measures following the election. And the UK goes to the polls today and the polls are suggesting “sweeping gains” for the conservatives who are unfit to govern and will drive their economy even further backwards if elected. All of this is unnecessary. All of it a reflection of a failed ideology trying to re-assert itself. The upshot will be that the Eurozone will wallow in crisis for years to come and the rest of us are taking policy positions that will lead to the next crisis – if not a double-dip recession later this year.

Today my RSS feed was full of all sorts of information and it took me some time to get through it all. The reason? I just purchased an Amazon Kindle DX and it arrived this morning. As a frequent traveller I seem to carry too many books and papers given I read a lot and so the Kindle is my proposed solution – everything is going to being stored on it – novels, travel documents, bus timetables, academic papers, mp3s, you name it. My bags will now be lighter and that continual shuffling of papers to access the right one at the right time is going to be a thing of the past. So I got to know it a bit today! Anyway, one paper I did read today was from the European Central Bank (ECB) entitled – The Impact of Numerical Expenditure Rules on Budgetary Discipline over the Cycle. It is so bad you would gasp for air reading it. It is replete with statements that just appear without scrutiny and are taken for granted but, which in fact, are at the basis of the whole argument about fiscal rules and are hardly acceptable.

Today I read another appalling beat-up from the researchers at Société Générale. The fabrications and poor analysis contained in the Report should instigate class actions from their subscribers for grossly misleading them in their investment decisions. But the real problem is that the financial journalists seem content to function as meagre mouthpieces for this hysteria – to use their columns to spread it widely without the slightest introspection or critical scrutiny. The result is that the public are continually confronted with outrageous propositions – which carry not even a skerrick of truth. They then form fallacious perspectives about public policy that ultimately undermine their own welfare. The lies are all presented as being “iron clad laws” and “inevitabilities” and “fundamental truths”. But as I learned as a youngster – lies are lies.

Today I was reading the The Ohio Funds’ Memorandum of Law in Opposition to Defendant Rating Agencies’ Motion to Dismiss, which is the legal document prepared by the Attorney General for the State of Ohio on behalf of the Ohio Police & Fire Pension fund, Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, School Employees Retirement System of Ohio, and the Ohio Public Employees Deferred Compensation program. It is interesting in its own right but also raises questions of the tyranny of bond markets and the need to conduct fundamental (not window-dressing) reform of the way our financial institutions and governments operate. These thoughts then took me back to Europe and the proposed bailout of Greece by its Eurozone colleagues. All these topics are interwoven and reflect the sheer stupidity of the way we constrain our monetary systems. Rather than being vehicles that can liberate us from poverty they have been designed to invoke harshness and disadvantage for most and untold wealth for a small minority.