The Portuguese begin a further long march into death and misery on behalf of Angela Merkel’s fully contagious “Reelect The Fourth Reich” campaign:
Gorilla says: “Babalu was vastly more entertaining, but Europeans love their self-inflicted and unnecessary suffering even more than we do!”
The Eurozone that is, as it’s clear Greece will default, it’s likely Portugal will default, and sooner or later contagion will spread to France, Italy, and Spain.
What’s desperately needed is what’s been needed all along: a clear statement by the ECB that it will serve as the lender of last resort for all Eurozone members.
What’s also needed is serious leadership by a German government whose entire fiscal and monetary policy is an amoral pack of lies foisted upon the German people.
Gorilla says: “It’s not 1923, it’s more like 1933!”
Portugal and Spain: money supply falling dramatically, austerity increasing debts and destroying the economy, and no confidence fairy arrival!
And this is another reason why yesterday’s Eurozone package is doomed to failure. Until the ECB is made lender of last resort, establishes a price floor for government debt, and cuts interest rates to zero, contagion will be the only thing ongoing in Euroland.
Gorilla says: “Contraction, contractionary, reaction, unactionary!”
Take a country with sovereign debt problems and an uncompetitive economy: say Portugal…
Impose a massive austerity program that has the effect of raising unemployment, lowering tax revenue, and making the debt larger.
Discuss endlessly at Euroland summits the idea that more bailouts are needed.
Conduct phony stress tests on a shaky banking system that do not address a default scenario.
Refuse to allow countries to leave the Eurozone, devalue, and default.
Repeat, repeat, repeat!!!
Gorilla says: “You’d think somebody would learn something other than the same old stupid thing!”
The ratings agencies, whose track record is entirely abysmal, now think that Portugal will need a second bailout…
The elephants in the room remain Italy and Spain. Nobody at the European Commission or the ECB wants to talk about them, but it’s pretty clear they’ll need help within the next 12 months.
All of this contagion is due to the failure of European politicians to gain control over their banks, many of which look like going bust.
There needs to be a far more serious effort at stress testing these banks, both in Europe and the US. The European periphery needs to get serious about leaving the euro, since austerity will not provide what’s needed: competitive markets and economic growth.
Gorilla says: “The proof of the pudding is in the bleating!”
It’s not about Portugal at all:
“Further Bailout Of German and Spanish Banks Agreed”
Gorilla says: “The actual story buried within the indirect story!”
Another Euro election, another right-wing Euro sceptic party elected!
This time it’s in Finland, where the winning party ran on a no more bailouts platform.
Meanwhile, Portugal’s lining up for 80 billion euros worth of bailout, and the contagion has resumed across the continent.
Gorilla says: “Finnish marks don’t like being German marks!”
Portugal’s getting a bailout (or rather Spanish, German and French banks are getting a bailout), and Spain is starting to sound an awful lot like Portugal, full of denial signifying something:
“The risk of contagion is absolutely ruled out…It has been some time since the markets have known our economy is much more competitive”.
So says the Spanish Finance Minister, although how a country with 20% plus unemployment coupled with massive austerity is to remain competitive must be something the markets also know.
Most of these indebted peripheral countries would be much better off leaving the Euro, giving their Northern European bankers a haircut, and devaluing their new (old) currencies.
Gorilla says: “The race is on, who will leave the Euro first? Club Med or the Germans?”
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!”
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