No One's Asking the REAL Question That Matters for the EU...

Phoenix Capital Research's picture


The following is an excerpt from my most recent issue of Private Wealth Advisory.


While everyone else is focusing on the Greek elections, the REAL issues pertaining to the EU (namely where the funding for Spain’s bailout as well as future bailouts will come from) continues to be ignored.


Indeed, no one seems to be asking THE key question regarding the EU: Just WHERE is the money for this bailout going to come from?


There are essentially four key options for this: the IMF, the EFSF, the ECB, and the ESM (the Fed won’t do it).


Unfortunately, NONE of them are viable options.


The IMF?


As noted earlier, the answer here is a resounding “NO!” as Obama won’t propose a European bailout during an election year (hence his desperate pleas to Angela Merkel to hold the EU together for the next six months).




Germany won’t allow the EFSF to fund the Spanish bailout as it would increase Germany’s exposure to the Spanish fall-out. The public outrage regarding the EU is growing in Germany by the day (55% of Germans believe they would have been better off keeping the Deutschmark while another 78% believe the worst of the Euro is ahead)


The ECB?


The ECB has completely avoided any notion that it would fund the bailout. Indeed, at the ECB’s most recent press conference, ECB head Mario Draghi stated,


Draghi Says ECB is Ready to Act as Growth Outlook Worsens


“We monitor all developments closely and we stand ready to act,” Draghi told reporters in Frankfurt after the ECB left its benchmark rate at 1 percent. Downside risks to the economic outlook have increased and “a few” of the ECB’s Governing Council members called for rate cut at today’s meeting, he said…


“I don’t think it would be right for the ECB to fill other institutions’ lack of action,” he said.


An additional item I want to note regarding the ECB… it hasn’t actually bought any EU bonds in 13 weeks, signaling that while it may act in terms of providing liquidity to banks… it has ceased actually monetizing EU sovereign bonds (another indication that Germany is the REAL EU backstop as Germany was completely against monetization).


            ECB keeps bond programme on ice, pressure on govts


The European Central Bankbought no government bonds for the 13th week running last week, ECB data showed on Monday as the bank judges the controversial programme of diminishing benefit in the face of the deepening euro zone debt crisis…


Two of the bank's German policymakers quit last year over          

the purchases, which critics say treads dangerously close to the  

ultimate ECB taboo of financing governments. The ECB also fears that its interventions give countries less of an incentive to implement the necessary and sometimes painful reforms.        


This ultimately leaves the ESM, the permanent European Stability Mechanism… which technically doesn’t even exist yet (it’s supposed to be ratified by July 2012).


Indeed, in order for the ESM to be ratified it needs the individual EU member states that will contribute 90% of its capitalization to first ratify it on an individual basis.


Here’s the list of countries that represent that 90% of capital as well as the status of their individual ratifications and the percentage of funding they are to provide.




Percentage of Capital





















































To summate the above chart succinctly… only four of the required 17 countries have even ratified the ESM (it’s supposed to be completely ratified in July 2012).


Moreover, you’ll note that the PIIGS as a whole are meant to contribute 36% of the ESM’s FUNDING!!!! Spain and Italy alone are meant to contribute 30%!!!!

So… Spain is supposedly going to be bailed out by an entity that doesn’t even exist yetfor which Spain is mean to contribute 12% of the funding. And to top it off… Spain hasn’t even ratified the fund itself!!!


More importantly, neither has Germany. And it’s not clear that it will either.


Folks, the real deal is that Europe is out of money. End of story. The only entity that could prop up Spain is the ESM… which doesn’t even exist yet.


So if you’re banking on the fact that the Greek elections mean the EU will survive or that Spain’s “bailout” has solved its banking issues, you’re going to be in for a very rude surprise before the summer’s end.


On that note, if you’re not preparing for the collapse of the EU, 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 investments (both direct and backdoor) will 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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falak pema's picture

the problem of euro collapse is a problem for Pax Americana and USd hegemony as much as it is for Eurozone. In fact, even more so, as all its derivative wired banks will burn and/or QE-to-infinity will be required; which is even worse down the road.

And the FED/Obammy (electioneering) know this, as does Merkel and NOW the whole world including the people of club med countries.

The cat is out of the bag,  as this puny tragi-comedy of Greek bailout has proven. For it to occupy such fascination in the tempestuously exorbited eyes of global fiinancial world and be paged centerstage in mainstream media since two years!

Now becoming a game of who is going to "chicken out" first, as nobody really has the funds and growth-hormone filled balls of fire to truly finance it; thus saving the corrupt banking cabal from its own inevitable demise. Race to bottom continues.

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Don Keot's picture

From the US fed via currency swaps with a very low intrest rate.

Bicycle Repairman's picture

The FED is the ultimate backstop.

shovelhead's picture

According to Dr. Funzatoulo,  the money won't be coming from Italy.

Winston Smith 2009's picture

"While everyone else is focusing on the Greek elections, the REAL issues pertaining to the EU (namely where the funding for Spain’s bailout as well as future bailouts will come from) continues to be ignored."

No, some have mentioned that problem very recently:

The "Genius" of Mutual Indebtedness - Nigel Farage

And a few comedians wondered about it two years ago:

Clarke and Dawe - European Debt Crisis

Only a gang of delusional idiots and thieves called "politicians," "bankers," and "economic experts" haven't been asking that obvious question.

Dead Canary's picture

"An additional item I want to note regarding the ECB… it hasn’t actually bought any EU bonds in 13 weeks,..."

I beg to differ. Last week when Spanish bonds hit 7% and Italian went to 6.5% or whatever, they both mysteriously dropped for no reason. Who was buying these crappy bonds if it wasn't ECB?

covert's picture

a bailout for eurobia is begging for eurobia to attack.



Kina's picture

Is a good question.


Die now or print and die later.

Bicycle Repairman's picture

More life is better than less.  Besides there's always the possibility of a miracle.


123dobryden's picture

the only one in europe who is at the moment solvent and has actual resources to lend is Germany, there are frew more countries that has something as well, but sum them together and it is not even enough to bail out greece. so the answer who can really do it is Germany or USA, Japan and China and since this investment must be consider by overyone wwith comon sense bad, the only solution is to PRINT as it is completely agains nature of any government to impose austerity and it  really really rarely happens. btw, PRINTING is the perfect socialist solution that comes straight from the heart of its ideology, to make everyone poorer and poorer to make us all more who is going to pay? those more and more few of us that still save and actualy have some savings  in FIAT...GOLD IS MONEY

andrewp111's picture

They'll print..


And Germany will leave the Euro. This is the endgame.

vast-dom's picture

of course they'll print. but who's stupid enough to buy graham's free subscription? that's the question.

Mr. Fix's picture

Same old question:

Print or crash?

We'll know  soon.


I'm guessing more super-top-secret printing,

like the kind Uncle Ben has been doing all along.

Buck Johnson's picture

I know, but the problem is it doesn't work in this situation.  Because investors and everyone is waiting for the money and they will be asked where the money came from and they will have to document it.  Once documented fake or otherwise, this moey will be a debit or credit to both parties involved and it will show on their books.  So one week they can have a 100 billion dollar debit but next week they have a 100 billion dollar credit or the debit disappears without where it went. 

Newsboy's picture

It's time to crash.

Kondratiev Winter is here.