It’s worth remembering, in an era where Greece and other countries are being pilloried for fudging the amount of their national debt to make it look smaller than it actually is, that there’s another group of countries which is often accused of the equal and opposite crime. Governments looking to take advantage of the World Bank’s HIPC program, in which they get classified as Heavily Indebted Poor Countries, need to demonstrate not only that they’re poor but also that they’re heavily indebted. And so they have an incentive to fudge their books to make it look as though they owe more than they actually do. If they’re successful, the World Bank, Paris Club, and even private creditors are likely to more or less wipe out the debt entirely.
When the US Justice Department and the European Commission both announce investigations into the dastardly ways of hedge funds making bets against the euro, less than a week after the meme broke, you can be sure that you’re looking at pure politics and zero substance. The closest thing to a smoking gun here is a dinner:
Listening to Robert Johnson, a Roosevelt Institute fellow, talk at his institute’s conference this morning helped drive home to me exactly why it doesn’t make sense to house a Consumer Financial Protection Agency inside the Fed, or other bank regulators. And the reason is that those regulators are consumer financial protection agencies already: the banks are the customers of the Fed and of the other regulators, and it’s the regulators’ job to protect the finances of their customers the banks.
Charles Forelle and Stephen Fidler have a really good front-page overview of the eurozone’s fiscal situation in the WSJ today. There’s not a lot of new news here, but as a lucid explanation of how we got to our present sorry state (and possible future even sorrier state), it’s vastly superior to sensationalist conspiracy theories about euro-shorting hedge funds.