ACTION….Spanish bailout “imminent….unavoidable”.

WORDS: “The G20 wishes to express its alarm about the eurozone crisis”

(Opening statement)

“We can see that the markets are not convinced. We must draw up a definitive and clear road map with concrete actions that make the euro more credible.” (Mario Monti)

Cameron tries to mend some rickety old bridges

With Spain perhaps days away from requiring a full sovereign bailout, its bond yields rising above 7%, persistent rumours of a time bomb waiting to go off inside La Caixa, and Slog sources in Madrid of the opinion that “a full bailout is imminent, there is not a chance Rajoy can beat the markets. A total bailout is now unavoidable”, the anodyne quotes from Mexico floated unsteadily about like ethereal gloop on the air.

David Cameron’s verbal diaorrhea continues unabated, leading to fears that – in the sultry heat of Mexico – his head may dehydrate. ‘It is very difficult politically to take the steps that are required economically,” he drivelled, “nonetheless if you want a functioning single currency you have to take at least some of those steps. You need to have elements of banking union, fiscal transfers and so on.”

Steps would be good. And functioning. And so on.

Mario Monti’s quote above (Italy’s bond yields spiked above 6% yesterday) was a melange of obvious and inane, with yet more maps and concrete needed, and perhaps a silent prayer that either the Vatican or the Mafia might be onside for once – or at least some of the data real. This from the man who yesterday morning told us, “Now the Greek crisis is over, we can look forward to some respite”.

As the Slog predicted last Sunday, the Greek election made no difference because all faith in the euro has now been lost. Mario Draghi sealed its fate by running roughshod over the Greek creditors during March and April this year, but the main impasses all along have been Angela Merkel, Wolfgang Schäuble, and a souring relationship between the founding nations France and Germany. It would be hard to factor in Brussels’ role in all this, because the pimple-heads there have done nothing except fruitlessly demand eurobonds and wander round the world looking in vain for bazooka ammo. Scoring them zero, however, is rather flattering given that Merkel’s score currently stands at -56.

All eyes will now turn towards June 28th, and a newly-strengthened Francois Hollande arriving with his package of stimulants and bonds. Most of the stimulants are in old money, and none of the bonds are concrete (another late delivery), but the gathering speed of events may well overtake the next summit. My usual source in Madrid further comments:

“Spain can only wait another two weeks, unless Rajoy gets some under-the-table money from the [European] Central Bank. That’s possible of course, you never know any more.”

It seems hard to imagine that any money coming from that direction will be real: given that Greece was bailed out with some paper signed by Mario Draghi, the best Madrid could hope for would be some used Frankfurt bus tickets.

Is there any upside? Oddly enough, yes, there is: at long last – with the time at 3 seconds past midnight, Scameron is hinting darkly at moving away from european markets, and re-establishing a strong commonwealth relationship. This tells us just how impossibly bad things are in the eurozone, and that the EU as we know it today is crumbling into dust. For our Prime Minister lacks the courage to back anything that isn’t a certainty. (Except the rapidly disappearing HS2, of course).

42 thoughts on “ACTION….Spanish bailout “imminent….unavoidable”.

  1. I misread it for a moment and thought of M. Hollande, “arriving with his package of stimulants and BLONDES” . Might do more good.

    I like all this insistence on “concrete”. It reminds me of a long-forgotten, politically incorrect, American TV series about two black men called “Amos and Andy” who were always getting into scrapes. In one episode they started a business called the Acme Corporation and went to the bank manager for a loan to help them sell more Acmes. “Can’t you be more concrete?” asked the bank manager. “Yeah, we can make ’em in concrete if you want”, replied one of the duo.


  2. “Scameron is hinting darkly at moving away from european markets, and re-establishing a strong commonwealth relationship. ”

    Cameron moving off message; Brutus will be along shortly.



  3. The so called panic about the % paid on Spanish, Greek bonds etc of 6% and the fact that if they get past the 7% mark then the Country/World will collapse. Am I the only one missing the obvious?

    1] Who are the people/institutions getting this 7%? It’s not JP.
    2] Inflation in the EU/Western world is on average 4-5%.

    Traditionally/Historically MLR as been RPI + 1%. So 6% is the historical norm, whilst 1-2% bond yields are abnormally low?

    Just a thought, why are these % rates low and kept low in the US/UK/JPN and Germany? Are the people/institutions who lend this money based in these countries? If so it’s a nice little earner borrow/create money/debt at 2% and lend it to other nations/people at 6%.

    Now if the G20 were to say/impose that all current Sovereign was to be at 0%, but the Capitol repayments would continue, but no % paid. Then these people/institutions would lose their nice little earner.

    Then all new Sovereign debt could be issued at average world RPI/CPI + 1%.

    This would give true value to FIAT currency, Also because debt charges then would reflect the true cost, people/institutions would think carefully before borrowing or indeed running a negative current account. People’s savings and the ability of pension funds to pay pensions would be protected. The Pension Funds would not have had to find more risky/speculative ways of creating income.

    Such as, Credit Swops, Derivatives or loaning out shares to Hedge and Private Equity Funds for them to manipulate the markets, shorting shares or highly leveraged buy outs of Companies and then the sale of these Companies assets. Loading these Companies with debts and/or raiding the Companies Pension Funds for other speculative ideas.


  4. I’m not sure the other Commonwealth countries want to re-establish a strong relationship with Britain.


  5. “Scameron is hinting darkly at moving away from european markets, and re-establishing a strong commonwealth relationship”

    I wonder how that idea will go down in the Commonwealth countries, especially Australia and New Zealand?


  6. Monti said ‘Now the Greek crisis is over, we can look forward to some respite.’ If these people issued a statement saying ‘blah blah blah blah blah blah blah blah blah’ .I might believe them.Do they really believe that anyone pays attention to anything they say any more,except for the chuckle factor involved?


  7. @IATL The UK would most certainly have to eat copious quantities of ‘humble pie’ with the likes of Australia, New Zeland and I would add India, S Africa and Canada too, for our flirtation with our nearer neighbours. I must admit that I have always felt that The Commonwealth was well shafted by the UK joining the EU and failing to negotitate any decent status for them. I guess at the time, the UK was looking for ‘trading partners’ in a European Community, while our friends across the channel wanted the relationship to be ‘so much more’ !

    As a young University Lecturer many years ago, it broke my heart to suddenly have to tell very talented students from Oz, India, Canada and the like that they were now ‘International Students’ and subject to much larger fees, while those from European Countries, often with lousy English, were to be given the same status as our own UK kids. In many cases those we were denying an education here had Fathers and Grandfathers had fought twice in the last century to defend a small island on the other side of the world…..and they could not understand how we could turn our back on them.

    So providing that no one goes for any financial unions, joint currencies etc….and as you point out IATL,….providing they would have us back…I’d personally love the UK to be part of a vibrant English speaking worldwide Commonwealth trading partnership where ‘the sun never sets’.


  8. @GrahamD
    Hear hear.
    I am sure we can stand on our own two feet in the world if we choose to, it’s not like we won’t continue to trade with Europe.
    Let’s hope our badly treated friends don’t turn their backs on us as we did them and a bit of humble pie might do this country a bit of good and wake us up. (We are like Dr Who, we need metamorphism to bring us to the 21st century and out of the 20th century)


  9. G20 issues statement “Europe must take measures to stabilize the euro” says group of men in nice location, err that’s it.


  10. – According to a Sky report from Bank of Spain: “the second *more detailed* audit of Spain’s banks has been delayed to September. In three months there may not be any banks left to audit!

    – Barreloso lashed out at journos in a press conference claiming the EZ crises didn’t start in Europe, oh no. It started in America. Who-da-thunk-it? Plagiarising Gordon Brown’s excuses will not solve the crises.

    – My money is increasingly on a giant co-ordinated central bank bazooka to flood the banking system. Anything to avoid admitting they’ve screwed it. How will Murky sell that to her German electorate? Will she try to hide it?


  11. One thing that Britain could do in this situation is SHUT UP. We don’t gain any brownie points abroad for the ill considered amateurish waffling of Cameron and the UK population is entirely informed about him and wants nothing more from his low grade spinners. Britain is on the sidelines of the EU, is often resented for its uninvited preaching and in truth is not in any position to say anything, being one of the highest personal and state borrowers in the world with a seriously stagnat economy. Oh, and one other person who could keep quiet is Alistair Darling, on the Beeb again this morning. He had no answers and has no answers. He had his chance to fix things and blew it spectacularly. He preferred to support the Labour heartland of the NE, at the very considerable expense of the rest of us. Now we still have robber banks and a vast new state debt, which doesn’t even show on the state balance sheet! Silence, please, Alistair! No more of your ‘help’!


  12. Oh….firm and specific statements again…
    Soon they will have to take not measures but measurements.
    Cofin measurements. For Euros cofin.
    Van Rompuy will write a poem, to be pronounced at the funeral.
    Greek coffee will be served at the ceremony.


  13. Silvio is not present any more in this amusing gatherings, or else stimulants and blondes would be normally available :-)


  14. Unbelievably, I find myself sympathising with Barroso. It really is a bit much to be lectured by Obama, whose country indulged to an extreme extent in all those derivative activities that created huge individual wealth but caused a large crash only 5 years ago, with knock-on effects all round the world. Has Obama already forgotten Lehman’s and all the rest or is the trend in the polls for his re-election so bad that he has to go in for such hypocritical distraction politics?

    And so to Spain. Once again we see the tacticians in Madrid doing their best to avoid the issue, which is that there is a giant hole in the banks that gets bigger and bigger as the real estate market tanks. And boy is it tanking! I still think the total size is around €300bn, a country crashing number. Maybe (tongue in cheek) Rajoy wants the ‘right’ number, available only when the market value of the 1m+ unsold houses is accurately established? That could take some time and might be an iterative process as it depends on confidence. Meanwhile, disregard any interim reports, they are just a smokescreen. Can has quite a lot of dents now…


  15. My advice to Cameron and other British politicians on the EZ crises:

    “When you have nothing to say, stop saying it”


  16. I think your figure of €300 billion is close to the mark. After the €100 billion bailout last week, Farage mentioned that the total bailout for Spain was closer to €400 billion. But as goldseek wrote last night, where’s the money coming from?:
    G20 statements are referring to “taking any necessary actions”.
    My feeling is that we’re going to see co-ordinated mass money printing…their excuse will be that it will save us from a widespread banking collapse.


  17. Oh but that’s the point of JW’s pic – the CAGW love-in between Cameron and the loathed Gillard is to be expanded into new realms. (Should I have said – the loathed Cameron?). Neither is getting much love at home, you see. After Gillard decimates the Australian economy, following in the footsteps of UK plc, these two will be exchanging carbon paper like it was bodily fluids.


  18. Poor Uncle Monti (who will never play The Dane) and the rest of the cast, our own perfumed ponce included, are heading for Crow Cragg. They will be learning about root crops in general and, specifically, the mystery of the carrot. The scene with the bull (markets) will need to be shot again with a different outcome and Michael Elphick will be played by a poacher turned printer. Can Danny save the day?


  19. I see in this chart that a big portion of UK’s debt is “Financial”. What does that mean? Owed by banks and funds?


  20. Yes indeed about Obomba, but who can forget the innovative Blyth Masters, British born and bred, Goddess of the CDS?


  21. Pingback: John Ward – Action…Spanish Bailout “Imminent…Unavoidable” – Words : “The G20 Wishes To Express Its Alarm About The Eurozone Crisis” – 19 June 2012 | Lucas 2012 Infos

  22. Interesting to see so many photos of Cameron with Gillard in Mexico. I presume the rumours of sucking up to non-EU/non-US nations are true. Makes sense.

    The EU is not going to print more money which means that broad money within the EU can only collapse which in turn means protracted severe recession. I’m guessing that countries like Spain and Greece, which frankly haven’t been democracies very long and clearly don’t have the constitutional measures in place to protect the long-term interests of the people, will eventually lapse into being military dictatorships as the people become ungovernable (Greece looks pretty close to that now). Some other countries will go the same way as the inability of the EU to cope with the crisis will render it worthless and cause New Europe to sink below the waves. I’m guessing only central Europe will survive and we will be back to where Europe was before the 70s with most of the peripheral countries lapsing back to being communist/facist dictatorships run by the military, the EU fallen out of favour and losing all influence and France, Germany, Italy and Benelux soldiering on at a much slower pace.

    China is busily screwing its own economy with massive debt creation and the Chinese don’t have any real money – what they have is a lot of fancy new buildings built and owned by the Taiwanese and Americans creating a property bubble of epic proportions.

    The US is happily printing money like crazy which will see it through the worst of Great Depression II but it shows no real sign of wanting to get to grips with its deficit, and in any case its entire population is seriously overpaid waiting for the “great correction” in living standards and postponing that day with ever greater mountains of debt.

    So in this great mess of failing economies and failing politics, a British government that seeks to ensure its supplies of food, energy and raw materials can be provided from the Commonwealth in return for Landrovers and Aston Martins might be more prudent than we ever thought possible for Scameron and crew. Maybe he does talk a lot of verbal diaorrhea but on the other hand would you expect him to say: “The whole world is going to hell on a hand-cart so we’re sucking up to the Aussies as they are the only ones with anything of any value to us – the rest of you are f*cked”. In the meantime scolding an EU that is probably going to be dead and buried in 10-20 years is equally prudent.


  23. @grounded. Any chance of relaxing the immigration rules to admit Grumpy Old Men? I’d catch the next plane out to NZ if I could.


  24. Agree, it was revolting the way the Commonwealth was dumped for all those smelly foreigners who don’t play cricket. But unfortunately, they have all moved on and prospered as they trade with the emerging markets. The have the commodities and ag supplies the em markets need. We have derivatives and a burgeoning welfare dependent underclass that we can no longer export as of old.


  25. Agree completely and he is no longer my prime minister. Same goes for my own grosse légume. My European friends over here are not amused.


  26. Somehow I just don’t see that working. Imagine he went to this summit, said nothing while he was there, even at the press calls, came back and still said nothing even when repeatedly asked by the press. We’d all be in a panic thinking “what the hell’s gone wrong!!!”. No, he’s talking but saying nothing. More or less the same as saying nothing, just looks different.


  27. @JiQ: Still, even with Cameron’s naivety, it’s better than seeing Red Ed Milipede running around screaming “mummy, mummy, we need to spend our way out of debt”, which essentially is what his Shadow Chancellor Mr Balls keeps saying. God forbid!


  28. Pingback: Action: Spanish Bailout "Imminent... Unavoidable"

  29. Pingback: Spanish Bailout Imminent « alternative economics

  30. Pingback: EUROBLOWN: Now it really is, as Spain & Italy to get…. | A diary of deception and distortion

  31. Pingback: John Ward – Euroblown : Now It Really Is, As Spain & Italy to get… – 20 June 2012 | Lucas 2012 Infos

  32. Pingback: SPAIN’S €100bn banking bailout: tracing the road map to the inevitable. | A diary of deception and distortion

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