by John Galt
June 10, 2012 19:30 ET
Ambrose Evans-Pritchard figures it out once again as the pathetic announced underwhelming bailout of Spain amounts to nothing more than a march in the woods for the new financial spring time financial Wehrmacht assembled by the German led European Central Bank. The dirty dark secret the Spanish media wants to mask at the request of the current government is as simple as it was for the Greeks and Irish:
“Don’t ask, don’t tell, and lie to our citizens.”
In tonight’s column, this point was highlighted in the following excerpt:
The weekend rescue package offers no fundamental relief. It is a €100bn loan package to the sovereign state of Spain, not a recapitalisation of banks. It raises Spain’s public debt by up to 10pc of GDP. There is no mutualisation of EMU debts, no move towards fiscal union. Nothing has changed.
Spanish finance minister Luis de Guindos said the package was big enough to eliminate “all residue of doubt”. As a former Lehman brothers man he must know that JP Morgan has already predicted that Spain will need €350bn, and that RBS says it may “morph“ to €450bn.
Existing holders of Spanish debt will be pushed further down the credit ladder with each transfer of EU money to Spain.
Europe will now pay the price for what it did in Greece, where EU bodies concentrated all loses on pension funds, sovereign wealth funds, life insurers, and others who had stood behind Greece until the bitter end. They suffered 75pc haircuts as a reward for loyalty.
If one is paying attention to the details, and believe me, bond investors are, then it does not take rocket science to be informed that the paper one might be holding will be crap in less than twelve months from now. The Greek government made all of these grand promises yet in the end, that nation has ended up as a virtual third world basket case. To support Mr. Pritchard’s discussion in this must read article, the bigger question can be answered in one chart; if the European and Eurozone investors believed there would be a realistic bailout, then why is the German 1 year Bund trading around 0.02% ????
With Italy and Eastern Europe now squarely in the cross hairs, the problem now becomes one of reality versus central bankster fantasy and propaganda. Real money is being lost in these ventures in state controlled crony capitalism and the individuals and corporations will play the sucker’s rally and re-allocate capital to those nations and governments that will let them enjoy profitability without the stupid risk imposed by the Euro-U.S. cabal.
To read the article in full click on this link from the U.K. Telegraph:
Europe’s democracies must not subcontract their destiny to the Bundebank
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