Spain goes bust while denial in Europe reaches comic proportions
Spain becomes the latest Eurozone country to get a bailout. But the eurocracy thinks everything in the garden is rosy
The Eurozone’s fourth largest economy has just been declared bankrupt. We can quibble about the terminology, but to all intents and purposes that’s the top and bottom of Saturday evening’s announcement that Spain would probably need 100 billion euros ($125 billion) to shore up its banks.
That’s a lot of money: bigger than the entire annual GDP of some European countries.
It’s also yet another blindingly obvious signal that the Eurozone is sliding its way into the dustbin of history. Well, it’s blindingly obvious to us. That’s certainly not how the clowns running the European economy see things.
The move will “contribute to restoring confidence in the Eurozone“, said French Finance Minister Pierre Moscovici. The context suggests he was not being intentionally amusing.
But if you think that’s a side splitter, you haven’t yet heard what Spanish Economy Minister Luis de Guindos said about it.
Since the bailout was merely for the banks and not the wider economy this was not at all as dreadful as it looked. “This is not a rescue,“ he said, in remarks that do not inspire confidence he has the slightest grasp of what is going on or even lives in the real world.
The sums of money involved in the bailouts are starting to look vast. Along with Spain, the bailouts in Ireland, Greece and Portugal now total something in the order of 500 billion euros.
These countries will almost certainly need more, maybe much more, since as long as they remain in the Eurozone they will find it difficult to be competitive enough to generate sufficient growth to be self-sufficient.
And all of this is before we start talking about Italy, which will probably be the next domino to fall.
When the spaghetti hits the fan we could easily be talking about bailouts in the trillions, at which point there’ll be no more money to pay the bill and the fairytale economics of monetary union will come to an abrupt and brutal end.
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