The EU’s Real Agenda: “Lie Until You Are About to Die”

Phoenix Capital Research's picture


The following is an excerpt from my most recent issue of Private Wealth Advisory, my newsletter for private clients.


The big news that the markets are attempting to digest this week is the €100 billion Spanish bailout.  This action and the upcoming Fed FOMC meeting on June 19-20 will dictate the market’s action over the next two weeks and possibly for the remainder of the year.


The first of these topics, the Spanish bailout, is an extremely complicated affair. The key takeaway issues that need to be considered are:


  1. How the bailout was performed: who was involved and who wasn’t.
  2. The details of the bailout structure itself.
  3. The financial implications of the bailout.
  4. The political implications of the bailout.


Let’s dive in.


Spain has been denying the need for a bailout for months now. Indeed, a mere two weeks ago, Prime Minister Mariano Rajoy stated that Spain would not need outside assistance. In fact, when France’s President Francois Hollande implied that Spanish banks might need outside funds at an EU summit last month, Rajoy retorted, "Hollande does not know the state of Spanish banks,"


What’s peculiar about this statement was that it was made when the Bankia nationalization was already underway. Indeed, two days after Rajoy’s comment, Bankia asked Spain for €19 billion in bail out funds.


So we now know that’s Spain’s political leaders will lie right up until the point of systemic collapse. We also know that both Spanish banks and politicians are highly incentivized to not quantify the true extent of the risks inherent in the Spanish banking system (remember, Bankia was discussing paying its dividend in April… just one month before it requested a bailout and revised its 2011 €309 million profit to a €3 billion loss).

Thus, I would change the common phrase applied to the EU’s political/ financial policies from “extend and pretend” to “lie until you are about to die.”


This notion is illustrated by the fact that on May 28th, a mere week before Spain requested a bailout, Prime Minister Rajoy continued to maintain that Spain would not need a outside funding, stating, "there will be no rescue of the Spanish banking sector."


At this point, Bankia had already requested its bailout and Spanish banks’ shares were in a free-fall. Moreover, Spain itself was just days away from requesting outside aid from the EU.


The timeline says it all:


  • May 9th: Bankia requests €4.5 billion loan, Spanish Government states that the bank is “solvent.”
  • May 21st: Spain meets Bankia’s request for loan and takes a 45% stake in the bank thereby instigating a partial nationalization.
  • May 23rd:  Bankia’s bailout needs grows to €11 billion/ Rajoy retorts to France’s Hollande, "Hollande does not know the state of Spanish banks."
  • May 24th: Bankia’s bailout needs grow to €15 billion
  • May 25th: Bankia’s bailout needs are now €19 billion (2011 profits revised to €4 billion loss)… the Spanish Bailout Fund has just €5 billion in cash.
  • May 28th: Rajoy comments, "there will be no rescue of the Spanish banking sector."
  • Weekend of June 8-10th: Rajoy texts to his finance minister: “Aguanta, we are the fourth European power. Spain is not Uganda… If they want to force the rescue of Spain, they need to start getting ready €500 billion and another €750 billion for Italy, which will have to be rescued afterwards.”/ Spain informally asks for €100 billion bailout/ EU Finance Ministers OK the bailout.
  • Sunday June 10th: Rajoy states that the bailout is a “victory” before commenting, "This year is going to be a bad one: Growth is going to be negative by 1.7 percent, and also unemployment is going to increase."


Thus, in just one month’s time, Spain implements the largest bank nationalization in its history and requests €100 billion from the EU to recapitalize its banks. And yet, throughout this time, Spanish politicians maintain that Spain’s banking system is “solvent” or in great shape… right up until they get the €100 billion at which point the truth comes out: “This year is going to be a bad one.”


As I said before, “Lie until you are about to die.”


With that in mind, I fully believe the EU is on the verge of a systemic collapse. How can a €100 billion bailout for (from a currently non-existent entity, the ESM, no less) save Spain when even its Prime Minister admits the real needs could be in the ballpark of €500 BILLION.


Ignore this week’s move, this is just the usual options expiration nonsense. The Spanish bailout (assuming it even occurs) has done nothing to address the underlying problems in the EU banking system (hence why Spain’s CDS and 10 year bond yields continue to explode higher).


On that note, if you’re not preparing for the collapse of the EU’s banking system, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:


Good Investing!


Graham Summers


PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at:












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billsbest's picture
Political union needed to solve Europe's problems: Greenspan


"Bailouts" are not the issue. Centralizing regional political control by binding the two together is the real agenda.
saturn's picture

agenda is not uganda. j/k

MrBoompi's picture

All these central banks know how to do is create money and give it away and manipulate interest rates. Since the rates are basically zero, all they're left with is creating money, so this is what they'll do. In the case of Spain, they might need a total of $500B but not all at the same time. Same with Italy's needs. Look for numerous bailouts over whatever timeframe TPTB deem is necessary.

orangegeek's picture

The US Markets - Dow for instance - aren't far behind the Euro collapse, although the die thing is a bit rich.


Europe is headed toward a big adjustment - no more socialism - they can't afford it.

duckarooni's picture

and the good news is...

Stuck on Zero's picture

The EU should hire the former Iraqi Information Minister (aka 'Baghdad Bob') and put him to work to diseminate financial information?  We could then see classic quotes like (actual quotes):

"There are no American infidels in Baghdad. Never!"

"My feelings - as usual - we will slaughter them all"

"Our initial assessment is that they will all die"

"God will roast their stomachs in hell at the hands of Iraqis."

"Surrender or be burned in their tanks."

"No I am not scared and neither should you be!"

"We have them surrounded in their tanks"

Britain "is not worth an old shoe."

Of U.S. troops: "They are most welcome. We will butcher them."

"We will welcome them with bullets and shoes."

"Washington has thrown their soldiers on the fire"

"These cowards have no morals. They have no shame about lying"

"They're not even [within] 100 miles [of Baghdad]. They are not in any place. They hold no place in Iraq. This is an illusion ... they are trying to sell to the others an illusion."

Citxmech's picture

Don't forget the immortal:

"We are winning!"

PS  I think CNB$ has him on their staff already. . .

Joe A's picture

Politicians lie? Really? I never would have thought. Some other news: water is wet. And can ZH please stop making free advertising for this guy?

Sleepless Knight's picture

Good Investing? I'm staying as far away from these rigged games as possible. Just sittin on the sidelines watching it all unfold.

Arnold Ziffel's picture

More Lies:


"House Hunters:" Subjects say it's fake


The blog Hooked on Houses is giving fans a dose of reality about the HGTV series "House Hunters." According to an interview with a former participant, Bobi Jensen, much of the popular show, which has been on the air since 1999, is faked.

Papasmurf's picture

MSM publishes shows to steer public action, not in response to demand or interest.  For instance, shows on repo of your vehicle if you don't pay up when banks can't even repo a house.  For instance, shows on the disorganized gold prospecting.  For instance, shows on timber harvesting when there is no home building. 


John Wilmot's picture

Politicians lie? No......

As for the usual "the EU is about the collapse" story, haven't events pretty thoroughly shattered this thesis? Hasn't it been shown time and again that the politicians feign and bluff and bluster (for domestic political reasons) only to sell-out to the Eurocracy in the end, by accepting or giving (as the case may be) the bailouts? Same with the ECB regarding the "will they or won't they print more money" story - hint: they will if that's what it takes to keep nations/banks (is there a difference anymore) from defaulting and/or leaving the EU.

The EU economy is going into the shitter, most definitely, but the EU as a political entity is going nowhere - or, rather, is getting stronger. The bailouts will continue, until eventually people accept the idea of fiscal union.

JeffB's picture

Are Robert Brusca & fellow cheerleaders on the payroll for pushing fiscal union, and the requisite surrendering of sovereignty, or do you think they really believe what they write?


Jack Sheet's picture

If your privates need wealth advice,then Graham is the man

Roger Knights's picture

"Thus, I would change the common phrase applied to the EU’s political/ financial policies from “extend and pretend” to “lie until you are about to die.”"

That's to wordy to be popular. shorten it to "lie until you die." Or, "lie until you croak," where 'croak" is ambiguous enough to mean "fess up at the last minute."

verum quod lies's picture

O.K., Graham pay close attention, it's:

1) lie,

2) alt + P

3) lie

4) alt + P

... Do you see a pattern yet?


EverythingFubar's picture

Alt-p not going to do anything dude. Ctrl-p is your friend. Obviously you dont work for the Fed...

Manthong's picture

Don't you think it's more like "Lie until you're dead and buried and then have some lies engraved on your headstone?

LouisDega's picture

I would click the link, But i am about to die. Maybe in the next life.

DaveyJones's picture

if you're lying and dying at the same time, can you form the mens rea?

disabledvet's picture

No the time line says nothing really. DOLLAR AMOUNTS and COST say it all. Spanish Banks represent systemic risk. PERIOD. Because Spanish Sovereign debt was modest going into the collapse "they got good bailout." everyone (in Europe of course) knows the other side of that trade. The "who didn't" as it were. I'll leave it to all of you to figure it out...suffice to say "it's not Greece but you should know by Monday"...if not tomorrow. Forget Spain. ANYTHING denominated in euro's is phucked. That's because this is an INTEREST RATE reset not a gold price one. In fact PRICES ARE FALLING which in the world of debt means INTEREST RATES are rising. (in the debt world debt costs move inversely to price unlike the equity space. Not to say the value of YOUR equity is rising of course.) In short "in the world of back asswards only comedy works." and that's the world of DEBT price resets.

pupton's picture

If only he had some kind of newsletter I could subscribe to...

DaveyJones's picture

LOL. But... it's "100% free" which we all know is 1% better than those 99% newsletters. Wait, that's a sign I think...

SwingForce's picture

What's funny is Graham thinks we don't know this "Lie Til You Die", the banksterz say everything is fine up until the friday that that are seized by the FDIC. Jamie Dimon doesn't lie enough, that's why he's in trouble today. This headline is a good 5 years behind the times, but so what, still ahead of MSM.

Hedgetard55's picture

Graham, I love your columns, but what do you mean "NOW we know they lie...".


Dude, where have you been for the past, oh, 20 years?

Haddock's picture

"An extremely complicated affair" analysed through 11 short paragaphs of cut and paste news headlines.

Great work.

Doubleguns's picture

And how do we know they are not lying now. I think its all a lie. Just ignore them and they will go away.

bank guy in Brussels's picture

It isn't true what Graham Summers writes: « ... the EU is on the verge of a systemic collapse ... »

In fact, not really, not any more than the rest of the developed world.

One should never underestimate the ability of the Powers That Be to extend the game a little longer.

The EU has been selected for centre stage of the farcical show at the moment ... and we may be the centre of the circus for the rest of the summer ...

But the Ponzi really involves half or more of the world ... and we still haven't yet begun full-scale Bernanke-style money printing at the EU level ...

So still some local room to manoeuvre, especially when combined with a few tricks like splitting the eurozone into two parts, or declaring force majeure for EU's bond market (basically owed to ourselves anyway) ...combined with Bernanke flooding the world with a few trillion via his black hedge funds in the Cayman Islands.

They still have their final bag of tracks, and ultimately in its fundamentals Europe is a lot better off than the US or China.

In the EU we just have the goofiest organisational apparatus ... which makes for all the good headlines.

EverythingFubar's picture

"The EU has been selected for centre stage of the farcical show at the moment"

I used to be inclined to believe these conspiracy theories but I think it is becoming rather obvious that, actually, they're all a bunch of clueless morons who don't have the faintest idea of what is going on or what to do.

Strangely, this is more alarming than a roomful of evil nasties sitting stroking their cats and cackling as their plans play out...

Jack Sheet's picture

just wait for the interest rate swaps keeping Treasury yields at 200 year lows in spite of 1.5 trillion dollar deficits to progress into nuclear fission - then you will experience what a systemic collapse looks like!

JeffB's picture

I don't see Europe being able to kick the can down the road very far without large scale money printing and Germany doesn't seem to be moving any closer to signing off on that.

If the EU splits in two to allow the southern countries to go on a money printing binge, I think a lot of people would consider that close enough to a systemic collapse to give Mr. Summers the benefit of the doubt.


Deep79's picture

Explain how fundametals are better in Europe?

I know US is very bad, but i think Europe is worse 

mrktwtch2's picture

tyler..please stop posting this guys gloom and doom we all know whats going

Zaydac's picture

"tyler..please stop posting this guys gloom and doom we all know whats going"

I suspect that the Tylers are getting some of their revenue from the top 3 "featured" posts, especially this Summers plonker (but not williambanzai7 who doesn't seem to be monetizing his brilliant creativity yet, and Reggie who I doubt has two gold sovereigns to rub together). I therefore make a point of clicking on the top 3 posts once a day, in the hope that by doing so I am adding a fraction of a cent to the Tyler's tiny revenue in addition to making my ridiculously parsimonious and very occasional donations to ZH (under another pseudonym). I draw the line at clicking on some of the ads that pop up. It beggars belief that anyone should think that I would ever buy cancer insurance, ask for a free trial of anything from Microsoft, or date a granny.

williambanzai7's picture

I don't think there is anything wrong with various contributors using ZH as a promotional platform for their online services as long as there is information/content value added.

I distinguish information/content value added from rehashes of old material and ideas simply for the purpose of maintaining promotional visibility. This is a subjective call, but I think you know what I mean.

On the other hand, this is a free web site and people should not be too quick to look a gift horse in the mouth, particularly since there is an amazing amount of quality content generated.

Zero hedge is not a second rate content aggregation site like many others.

Dead Canary's picture

But I like gloom and doom. It gives me a happy.

bunnyswanson's picture


Sanders Releases Explosive Bailout List

Sen. Bernie Sanders, Reader Supported News

13 June 12


ore than $4 trillion in near zero-interest Federal Reserve loans and other financial assistance went to the banks and businesses of at least 18 current and former Federal Reserve regional bank directors in the aftermath of the 2008 financial collapse, according to Government Accountability Office records made public for the first time today by Sen. Bernie Sanders.

On the eve of Senate testimony by JPMorgan Chase CEO Jamie Dimon, Sanders (I-Vt.) released the detailed findings on Dimon and other Fed board members whose banks and businesses benefited from Fed actions.

A Sanders provision in the Dodd-Frank Wall Street Reform Act required the Government Accountability Office to investigate potential conflicts of interest. The Oct. 19, 2011 report by the non-partisan investigative arm of Congress laid out the findings, but did not name names. Sanders today released the names.

"This report reveals the inherent conflicts of interest that exist at the Federal Reserve.  At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks.  These conflicts must end," Sanders said.


Here you go - Doom and gloom 6-13-2012

Mr. Fix's picture

I agree. I need my daily dose of doom!