Well, it’ll screw you if you’re Portuguese, but if you’re a German, Dutch, Spanish, or French bank, so much the better!!!
The shambolic EU and its equally ridiculous Central Bank continue to believe in nonexistent confidence fairies, the ones who will be so impressed if you promise to cut spending and guarantee your electorate a decade or so of grinding deflation and high unemployment!!!
Gorilla says: “The only piper you pay in Oporto is the one in denial who yells Achtung!”
British Prime Minister David Cameron: “All necessary options is strong language. Of course the EU is not a military alliance and I don’t want it to be a military alliance. Our alliance is Nato.”
Gorilla translates: “Our ally Germany in NATO thinks all options are unnecessary”.
The EU’s foreign policy chief says a no-fly zone over Libya might threaten civilian lives…
Meanwhile, the President of France says air strikes on Libya would be justified if Gaddafi’s bombing civilians or using chemical weapons…
Yet another example of why the EU doesn’t carry much weight on the world stage.
The reality, as President Obama knows only too well, is that there’s no support in the UN Security Council for a no-fly zone, and therefore very little anyone can do about what’s going on in Libya.
Gorilla says: “At least it’s refreshing to see the EU, and not the US, in Ginsu-rattling mode!”
Not the Irish banks, they’re already bust, but the German banks!!!
Germany doesn’t want to fess up to the huge losses their banks will take on their many bad loans to the Eurozone periphery. So there’s great insistence on austerity and great resistance to any kind of Eurobond creation.
Ireland, fresh from an election, wants to change the terms of their EU bailout deal, so a game of brinksmanship will be undertaken this weekend at the EU summit.
And it’s all a big disaster. Ireland should default and leave the Eurozone. The Germans should get busy with restructuring and recapitalizing their banking system.
Gorilla says: “Extend and pretend is the only game in town, and it’s a mug’s game!”
The Irish have changed governments, and the latest election winners promise they’ll be talking with France and Germany about renegotiating their loans from the EU!
Meanwhile, griding deflation goes on and unemployment continues rising.
Put simply, Ireland can’t grow its way out of this disaster unless they leave the Euro zone. French and German bankers, not to mention French and German politicians, are not about to let them off easily, so the game of extend and pretend will continue.
Gorilla says: “A landslide it may be, but it’s on top of a mudslide that isn’t ending!”
And engaging in the usual trade protectionism, now disguised as a triumph of anti-smuggling!
It must be Euroland!
Seems some Poles are working with the Chinese to smuggle in garlic disguised as onions, so as to save money on tariffs!
Rather than lower the tariffs, possibly putting Euroland producers out of business (the Chinese supply more than 90% of the garlic sold in the US, for example) or encouraging non-Chinese producers in poorer countries to get going with garlic exports, the EU congratulates itself on keeping the barriers to entry high!
Gorilla says: “It’s no wonder that ag subsidies are 60% of the budget in Brussels!”
John-Joe Feeney, unemployed carpenter, Dublin (h/t Reuters): “I just know they (the government) are going to hurt the people who have nothing, like me, my wife and kids and leave the fat cats alone. It’s not worth thinking about.”
Gorilla says: “So sayeth the Irish, so sayeth we all!”
From the ever hapless ECB Chairman Jean Claude Trichet: “We have got a monetary federation. We need quasi-budget federation as well. Yes, we could achieve that if there is strong monitoring and supervision of what there is. Because what exists doesn’t correspond with the actual situation that we are facing. It is a situation where we need quasi-federation of the budget.”
Gorilla translates: “A monetary union without monetary union is a French union not yet on strike!”
How much longer will extend and pretend be the only approach Frankfurt will entertain?
The reality is that the markets have decided that default risk is high in the following countries: Ireland, Portugal, Greece, and Spain.
Soon, markets may decide that France and Italy no longer enjoy the blessing of the confidence fairies.
And then the Germans will have three very bad choices:
1) Continue writing ever larger checks to keep extend and pretend going another 3 years.
2) Decide to punish creditors with drastic haircuts on the existing debt, with German banks getting a very large dose of Wildroot.
3) Unwind the euro experiment once and for all.
As Krugman observes, the incompetence of the EU and ECB is breathtaking.
Gorilla says: “Gasping for Deutschmarks is the new oxygen of austerity!”
The British themselves are sorta members of the EU.
Military and foreign policy unity? Sure!
A single currency and bailouts for German and French banks? Not so much!
The problem for the Turks at the moment is twofold: a) they’ve got a government that’s much more favorably disposed to the Islamists in the country and b) the French don’t think a largely Islamic country makes any sense as an EU member (see: burqa bans, restrictions on immigration, Sarkozy’s inflammatory election year rhetoric, etc.).
Gorilla says: “It’s not the messaging, it’s the messenger!”
Gorilla’s Blog