Posts Tagged ‘Spain’

The End Is In Sight

Monday, July 23rd, 2012

For Spain and Greece, and possibly everyone else in Southern Euroland, the day of reckoning looks like arriving within a few weeks!

There simply is no way to avert a euro breakup until and unless the ECB: 1) guarantees all sovereign debt, 2) cuts interest rates to zero, and 3) announces it will pursue a higher inflation target of at least 4%.

Further austerity is entirely self-defeating, but denial remains the flavor of the decade in Brussels and Berlin.

Gorilla says: “Wishing that austerity works is as big a fantasy as wishing the Euro would work!”


Spain Commits Suicide

Wednesday, July 11th, 2012

More austerity, more tax increases, which will lead to higher unemployment, lower government revenues, and more unsustainable debt.

The amorality of Euroland’s leaders is breathtaking, not quite on a par with Hitler, but right up there in terms of sheer, pointless cruelty. The Germans, having destroyed Europe twice, are now going for the hat trick.

Gorilla says: “Manana will never come, so long as these fools are in charge!”


Spain Doesn’t Have Another Year

Monday, July 9th, 2012

Spain will get a one-year extension to hit its deficit targets, but like everything else in Euroland, this makes no sense until and unless unsustainable Spanish borrowing costs are substantially reduced.

This can only come by the ECB acting as lender of last resort. Spain itself also needs much higher inflation in northern Europe to become competitive economically. And there needs to be big-time stimulus to get people working again.

Right now, the euro won’t last another year without these major policy changes.

Gorilla says: “The finance ministers, like the prime ministers, appear to be as stupid a collection of people as can be assembled anywhere!”


Can Kicking Ad Nauseum

Friday, June 29th, 2012

Another EU summit, another chance to kick the can down the road…

Nothing of substance was accomplished here, because there remains a refusal to understand that the problem is one of competitive balances, not sovereign debt.

Taking Spain off the hook for the debts of its banks may seem like progress, but Spain’s economy is uncompetitive and unemployment is 25%. Yet the beatings of austerity must continue!

Once again, the ECB must become the lender of last resort, cut interest rates to zero, pursue an inflation target of 5% until unemployment comes down, and encourage the Germans and other northern European countries to undertake significant stimulus (a couple of trillion, not a continent wide peanuts jobs program of 100 billion): all of this is necessary and none of it is being done.

Gorilla says: “3-2-1… yep sometime today markets will discover that this summit has failed like the previous 17!”


Well, That Was Quick

Monday, June 11th, 2012

The markets have spoken: the Spanish debt deal isn’t so hot!

And the reason of course is that the loan does absolutely nothing to solve the fundamental problem in Euroland: competitive imbalances between North and South.

How the Spanish, with 25% unemployment, are supposed to borrow another $100 billion to rescue a busted banking system, while having absolutely no prospects for economic growth, is a question no one in Frankfurt wants to ask or answer.

Spanish borrowing costs continue to rise.

They will do so until and unless the ECB finally decides to be a central bank: become the lender of last resort on all sovereign debt, cut interest rates to zero, and pursue an inflation target of at least 5% until competitive balance is restored and the amoral disaster of utterly unnecessary long-term unemployment is resolved.

The Fed also could be doing a lot more to restore the US economy by pursuing much higher inflation targets, but alas both sides of the Atlantic are plagued with the worst leaders since the last Great Depression.

Gorilla says: “It’s not the banks who need help, it’s ordinary people who are being destroyed for no good reason!”


Can’t Imagine What Defeat Looks Like

Sunday, June 10th, 2012

If the rescue of Spanish banks is “a victory for the Euro”, according to the Spanish Prime Minister, what exactly does he mean?

Spain still has horrendous unemployment, cannot borrow money at anything other than unsustainable interest rates, and has not addressed in any way its lack of competitive balance with the Germans who got them into the mess in the first place.

The latest effort to kick the can down the road will also fail.

What’s needed is what’s been needed all along: ECB as lender of last resort to guarantee all sovereign debt, a reduction in ECB rates to zero, greater consumption and a vastly higher inflation target by the Northern Europeans.

Gorilla says: “Reality in Berlin and Frankfurt remains entirely unrealistic!”


Still Not Getting It

Wednesday, June 6th, 2012

Spanish banks are bust, but that’s not the problem!

What’s wrong in Europe is competitiveness and the balance of trade. So long as the Germans continue to beggar their neighbors, refuse to allow the ECB to act as lender of last resort, and will not go along with both higher inflation and greater consumption by Northern Europe, the Euro is doomed.

It’s not about banking reform, or a Euroland fiscal regime, it’s about the utterly pointless pursuit of austerity, which guarantees that Spain, Portugal, Ireland, Italy, Greece, and likely France will be stuck in a decade or more of severe depression.

Gorilla says: “The German empire that is rising is already about to fall!”


Still No Plan In Euroland

Wednesday, May 30th, 2012

As Spanish banks go bust, and Greece continues its slow march to the drachma, what is the ECB doing?

Absolutely nothing!

There seems to be little understanding about what the stakes are.

Put simply, unless the ECB is willing to act as lender of last resort, ramp up Eurobonds, guarantee bank deposits (and possibly impose capital controls), and raise the inflation target to at least 5%, there is no chance whatever that the Euro will survive.

A continent wide depression is now on the cards, and with it will come yet another financial crisis for the global economy.

The cowardice and lying by Euroland leaders, in particular Chancellor Merkel (certainly the worst German leader since Hitler), is breathtaking.

Gorilla says: “There will be revolution if there is no resolution!”


Only In Euroland

Friday, May 11th, 2012

Where else in the world is an unemployment rate exceeding 25% (and over 50% for younger workers) met with absolutely zero response by government leaders?

In Spain, there’s far more interest in deficit reduction and recapitalizing banks, the former of which will only increase unemployment and deficits while the latter will only work if the ECB at last decides to be the lender of last resort.

In Greece, the banks are essentially finished, there’s no government, and a marked rise in political extremism.

In Germany, of course, the lying by Angela Merkel et. al. goes on.

Gorilla says: “Talk about continental drift! Not since Hitler has Europe been plagued by so many worthless and amoral leaders!”


Spanish Flu II

Monday, April 30th, 2012

Back into recession goes Spain, with 25% unemployment, and no hope in sight…

What’s needed, yet again, is for the ECB to backstop all sovereign debt, for the Germans to commit to both more spending and more inflation, and/or for the downtrodden Southern Europeans to get out of the Euro.

Gorilla says: “Destroying countries to prop up German banks is no more popular now than it was in the 1930s-40s!”