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!”
The Portuguese government looks like falling on the eve of yet another EU summit to deal (or not deal) with sovereign and bank defaults.
The answer from Frankfurt, as usual, is that Portugal can borrow more money, engage in crippling austerity, and see what happens in another 5-10 years.
The problem in this case is Spain, whose banks have a big stake in Portugal and are not adequately capitalized. If markets aren’t impressed, it will be a big problem for Chancellor Merkel, because Spain is a much larger economy.
Gorilla says: “Extend and pretend in a world without end!”
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”.
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!”
So, there appears to be some accountability somewhere in Germany, at least!
Gorilla says: “Forget about that happening here, we don’t do responsibility or accountability in the USA!”
What if your doctoral thesis was full of plagiarism?
If you were an academic, you’d be tossed out of your university, good luck finding a career from then on!
Gorilla says: “Those crazy Teutons, you just can’t copy ‘em!”
German Finance Minister Wolfgang Schaeuble: “Germany has never insisted that the next ECB president be a German”.
Gorilla translates: “We will insist that he run the ECB like a German”.
Angela Merkel, Chancellor of Germany: “We want to take the best practices as a benchmark, and in order to achieve that, we want to agree on particular measures”.
Gorilla translates: “Nice little periphery you’re going broke in. Shame if anything happened to it”.
Changing the payback period for Greece and Ireland from 3 to 30 years: the newest gambit on offer from the Germans!
It’s all about bailing out German banks, and avoiding the far larger nightmare of contagion spreading to Spain…
And it won’t work, because the price Club Med will pay for all this crippling debt is years of grinding deflation and high unemployment. Ultimately, it would be far better for Greece and the others who are in trouble to default, leave the eurozone, and devalue. But that won’t save the Germans, French, and Dutch, or their bankers, so extend and pretend goes on.
Gorilla says: “It’s not a Hail Mary, but it is a pass!!!”
Italy’s having to pony up more money to refinance debt…
And so the real test of Euroland may be beginning.
Portugal, Ireland, and Greece are very small beer in the scheme of sovereign debt, but Italy and Spain are very large economies.
Sovereign default and/or leaving the Euro cannot be ruled out, which is bound to make bankers in Germany very nervous. They’ve been trying extend and pretend for a year, and it’s clearly not going to work.
Meanwhile, the German government continues merrily along with beggar thy neighbor and a stupidly fetishistic focus on inflation and austerity.
Gorilla says: “When German denial meets German shitpile, better run for the exits!”
Gorilla’s Blog