Ambrose Evans-Pritchard's Contrition

Tyler Durden's picture

In a fiery article written today, Telegraph's Ambrose Evans-Pritchard unleashes a scathing critique of Europe's AAA club for daring to demand that Spain actually follow through with what they have been pretending to be doing, namely cutting spending and promoting improved government tax collections. We now know that Spain did neither, with spending increasing while tax revenues dropped from last year (and as we will not tire of pointing out, if the government has lost sight of the ball, and the economy is collapsing, it is not due to a cut in spending but due to its own inability to govern - something the people in a democratic regime usually are quite capable of fixing on their own). But complying with agreements in a broke Europe is not part of the New Normal. His summation, phrase briefly is as follows: "We discover – yet again, you might say – that Germany, Holland, and Finland will not stand behind their solemn pledge of solidarity when push comes to shove. Spain’s premier Mariano Rajoy has been betrayed. Nobody should be entirely surprised if he and the Spanish arch-nationalists in his circle offer a condign riposte, and bring down the entire temple on the heads of the creditor powers." Of course, none of that is true, and what Germany, Holland and Finland are doing is doing their best to get dragged into the money pit that the rest of their insolvent socialist neighbors can so efficiently dug in the last several years.

What the article really is, is simply Ambrose's contrition for misreading the balance of power in Europe. Like so many others, he was all too eager to swallow the misdirection narrative that as a result of Mario Monti's stubborn gambit at the June 27th Euro-summit, the balance of power had finally shifted from the exporting, rich and quite solvent nations, to their liquidity and bailout addicted neighbors, something we claimed all along was a major mistake (see "Europe's Beggars: Bluffing Their Way To Unity And Propserity Via Hijacking And Extortion").

The truth is, at least so far, that nothing in Europe has actually changed, with Germany still calling all the shots - after all they are and always will be Europe's paymaster - and while some may say the ECB eeked out a victory over the German faction (read Weidmann) in the governing council, this too is so far a chimera: so far the ECB has done absolutely nothing due to the conditionality clause, which as Rajoy has demonstrated, is proving to be the biggest stumbling block as it means an overhaul of the top, and the effective ceding of sovereignty to yet another technocratic authority.

As one may expect, Ambrose's expiation is full of sound and fury. To wit:

This deal has been breached. Can we believe anything that the Chancellor of Germany, the prime minister of Holland, and the prime minister of Finland say from now on? The EMU rescue edifice is built on sand.


You might say Mr Rajoy had no choice. But he did. There were those whispering in his ear that Spain should instead retake control over its own monetary, exchange, and sovereign policy levers, and break out of its debt-deflation trap.


Such a course might or might not be disastrous for Spain, depending on your analysis of EMU’s structural flaws, but it would certainly be disastrous for German and Dutch banks. (Given that it would cause the collapse of monetary union in the worst possible way).

Perhaps a better question is can we believe anything that Europe's insolvent, bailed out countries say from now on, or ever. Just one case in point: Greece, whose economy has never been worse, which has promised for 3 years now to get its act together, and which merely requests more and more aid. Or Italy: remember when the now defunct SMP was used to buy Italian bonds last summer on strict conditionality, which Berlusconi completely forgot about, and which led to his downfall after the then-brand new ECB head, Goldman's Mario Draghi refused to buy Italian bonds for a few weeks, leading to record Italian bond yields, which also led to Berlusconi's resignation and replacement with another Goldman puppet? Or, for that matter, Spain?

All these questions are conveniently ignored, instead the fingerpoint is focused on Germany, for, get this, being smarter than the rest and taking the most advantage of the Eurozone which the ability to grow debt was still there, and everyone was doing great.

The Spanish bubble was after all a joint venture. Spain was flooded with cheap capital from Germany and Holland that it could not prevent or control under the EMU system. Did the German and Dutch regulators recognise the danger, or try to stop the excesses? Not really. They were complicit.

Sure, one can assign blame, point fingers, and bluster until one is blue in the face, but the argument that "it's only fair" only works in hard core socialist nations. Luckily not everyone has gone down that path just yet.

Which then brings us to the crux of AEP's argument: Spain should just leave and stick Germany with the bill:

Mr Rajoy’s authority is collapsing. Some 84pc of Spaniards have lost confidence in his leadership. The current course is becoming hopeless.


Today he will announce a fresh round of austerity measures to meet EU targets that cannot be met, adhering to reactionary strategy of "internal devaluation" imposed by Germany that is destroying his country.


And now he has just been betrayed by the German bloc anyway. Es el colmo. If he were to request full sovereign rescue, he would most likely be shafted again. Who can blame him for dragging his feet?


The temptation to tell the Germans and Dutch to go to Hell – and to pull the pin on their banking systems – must be growing mightily. Desperate men do desperate things.

This argument is based on the assumption that a collapse of the Eurozone which would surely follow, would damage Germany more than it does Spain. This is quite debatable, and so far nobody knows just who will suffer the most: more than anything, there is political gaming of public sentiment than actual hard data.

As a recent example, none other than the FT's own Euroexpert Martin Wolf explained "Why exit is an option for Germany." His argument is spot on: there will be pain but in the end of the day, Germany will survive. The question is what will happen to the already insolvent PIIGS in the meantime.

What the debate about Europe really boils down to is simple: who has the upper hand - the countries that still have vibrant, if deteriorating economies, such as the AAA-club, or those countries which are a lost cause without endless monetary and fiscal support from outside. It is no surprise in this context that Europe, which is increasingly becoming wary of Germany, has fully backed Obama, and his particular approach to "wealth redistribution" by promising, as was noted previously, that it would not make waves until he is reelected. The next question then is how much will US taxpayers enjoy bailing out Spain, Greece, Italy, Ireland etc, if and when Germany does pull the plug. But that bridge will be crossed in due course (if not too long down the road).

For now, what is certain is that the current scorched earth campaign, in which Germany needs a weak periphery to keep the EUR weak, and its export industry strong, is on a collision course with the "welfare" of everyone else. Will Germany finally agree to persist in demanding what is best for its people, or will it succumb to the insolvent, socialist world's fairness doctrine? Today, AEP realizes that the answer is, at least for now, a resounding no. We can see why he is angry, but that does not change the reality that in Europe the insolvent periphery never had the upper hand, and most likely never will. Instead, as has been the case all along, it will be used for whatever political and economic purposes Germany has in mind, and then, when the ability to transfer any wealth via current account funding courtesy of TARGET2, it will discard these countries.

As for AEP's assumption that Spain (and its insolvent brethren) have all the leverage, we will likely soon find out. By now it is obvious that Greece is a day-to-day basket case, whose presence in the common currency is increasingly uncertain. And once Greece is out, everyone else will rush for the exits.

If nothing else, then at least we will finally find out just who had the most to lose from the unwind of the most contrived monetary experiment in modern history.

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Cognitive Dissonance's picture

"Perhaps a better question is can we believe anything that Europe's insolvent, bailed out countries say from now on, or ever."

Once a habitual liar, always a habitual liar. Particularly when they are rewarded for lying with more fiat crack.

"I will gladly tell you the truth next Wednesday for a fiat infusion today."

redpill's picture

No one ever believed them, they just all agreed to pretend for awhile.  Then they put on this ridiculous spectacle of fake outrage when what they knew all along finally becomes undeniable when the curtain gets pulled back.  Spineless political vaudville actors without the balls to address reality.  Worthless human beings.


Abraxas's picture

I don't think they are consiously lying... they are simply so much in double-think that they don't even know the reality any more. It's a professional requirement, just as it is with the lawyers... and doctors... and educators...

bank guy in Brussels's picture

As Tyler himself admits in the above article:

« ... nobody knows just who will suffer the most ... »

re a disorderly exit from the euro by the Mediterranean countries.

Tho what is not emphasised enough above, as some other ZH articles pointed out long ago, is that the German banks, insurers and pension funds are truly vulnerable ... if they weren't, Germany and their super-mini-troika with Netherlands and Finland, would have pulled the plug a long time ago.

Evans-Pritchard is not angry because Germans said 'no', it is because they welshed on an important hard-fought deal, that was essential to Europe stabilising.

And he is not 'contrite'. Evans-Pritchard has long consistently held that the southern countries should consider leaving if Germany does not lead the Northern countries out first (his preferred solution).

This AAA 'no', Germany with Holland and Finland backing out of their earlier deal, is not a 'no' deriving from a strongly superior position, as Tyler thinks, but admits he cannot confirm ...

It is no more than one more poker-game 'no', as both the creditor and debtor countries are playing chicken ... gambling that no one will detonate the bomb in this game-theory exercise. A gamble that may shortly explode.

It is true that the debtor countries are backing out of the brutal 'austerity' cuts ... but they have more moral right to do this, because those troika-demanded cuts are inhuman and destructive to the peoples of those nations, as ZH has shown. They create death-spirals, as ZH has so well documented in Greece.

A normal and fair bankruptcy-type restructuring, seems to be impossible here in the euro-zone, because of genuine fears that the unknown consequences are catastrophic. These fears are reasonable even if erroneous.

So what we have left is this poker game. When the euro-zone starts breaking up ... my guess is still Italy under Berlusconi doing it first ... then, at that point, as Tyler says, indeed

« at least we will finally find out just who had the most to lose from the unwind »

M.B. Drapier's picture

They create death-spirals, as ZH has so well documented in Greece.

It's completely bloody bizarre that ZH has more or less totally reversed its position here from the one it's taken over Greece, among other things. If you had to cut rough on one bailout recipient, Spain or Greece, it would be Greece, where the root problem has always been public spending, not Spain, where the problem is, to a large extent, the Spanish state being forced into bailing out foreign creditors in private-sector banks.

Abraxas's picture

@ M.B.

I tried to +1 you for non-conformism, but the damn thing does not work (and only for your post).

matrix2012's picture

"@ M.B.

I tried to +1 you for non-conformism, but the damn thing does not work (and only for your post)."

cuz M.B. italized his very first line making the arrows paralyzed for most of the browsers


if a nation must do some sacrifices, the 1st batch to let go should be those ailing financial instititutions incl. the ailing banks!  the people incl public employees should come as the last... unless they hv ridiculous benefits such as the beach guard or school administrator in California with pays of many hundred Ks and millions in welfare :D LoL

a nation should hv the courage to say big fcuk to those bankster's tools and demolish them within its border!

provided the nation has a good, effective, non-corrupt leadership... not the kind of "enemy from within"

a nationalistic point of view is as relevant today as it does in the nation-state history, folks should not be fooled with the globalist propaganda to disgrace it!


"A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear. The traitor is the plague." -- Marcus Tullius Cicero


QUiZ: are you ZHers aware of the centuries old practice undertaken by a particular group of cabals whereby they would change their name, in order for them to appear part of the dominant race of the country in which they lived, so as they could obtain influential positions in that country, which they would then exploit to serve their real masters elsewhere.  There is plenty of evidence to prove them continue that deceptive tradition ???

got it already? :-)

Kobe Beef's picture

Cicero was right. It is the same problem all over the West: traitors within.

Fuck the TBTF. They've already failed; and thus every expense taken, every pact broken, every pension stolen, from here on out, is a sunk cost. Let them fail.

Though the heavens fall, the Bank must die. And its patrons with it.

Tyler Durden's picture

This is incorrect. Perhaps you missed the chart showing that the ECB is now funding SPANISH banks to the tune of €412 billion to offset the complete collapse of faith in the system manifested by a record deposit outflow.

You may be shocked to learn that the bulk of creditors (and equity holders) of Spanish banks are other Spanish banks as well as the local population both directly and via local pension and welfare funds. Spain's politicians don't care about foreign creditors. They only care about themselves and what would happen if the population realized the truth of country's sovereign and banking sector insolvency.

Oh and Spain has a massive public spending problem, which will become evident in the annual December deficit revision (recall what happened in December 2011).

What is going on now is hope and prayer that everyone sticks their heads in the sand over the threat of M.A.D. because nobody wants to be the one who pulls the pin on the grenade, although it seems the time of Greece is coming.

falak pema's picture

the damning epitaph on the Euro game is that the "core euro group", caught in the PANICK of their Merkel dictat of 2009 have NOW joined in 2011/2012, the scam against peripheral Euro nations, like the ANGLO HFs, to profit from the disarray of Club Med TO PROTECT THEIR OWN BANKS; instead of having been JOINT and SEVERAL from day 1 in 2009. They should  have imposed on FED and POTUS their joint refusal of Euro group to allow the banking cabal to pump MORE and MORE their shadow banking plays on interest and CDS bets that INEVITABLY led to Euro sovereign BUBBLE; like it is DOING currently with Commodity bubble in China and Brazil. The new Bubble as the Oliver Wyman article has amply pointed out! 

This bubble economy is the cancer of Oligarchy Banksta world that ONLY pumps n dumps for the 1% !

ANd Merkel and Sarko and all the others were IMPOTENT to stop this, IF WE GIVE THEM THE BENEFIT OF THE DOUBT; to save their banks they became patsies; and now it looks like its too late.

Water under the bridge. Whatever the KAntian Dream of origin. 

GCT's picture

Falak I agree with you too a point.  You can pick almost any western industrial country and the politicians got greedy nothing more in my mind.  I may be wrong on this and thats ok with me as I am here to learn.  Greed got us here and making promises the politicians knew one day would implode to garner votes and keep them in power.  Many countries including the USA are reaching that point. 

I do have a general question for you smart folks. Could this have been avoided?  I think it could but it would have taken courage and leadership.  We lack leadership and we have career politicians that want to stay in power so they got the banksta's to help them stay in power.  The banksters were happy to do this as they now own almost every government on earth. 

Even we Americans over consumed to keep up with the Jone's and now blame others for our stupidity.  I look in the mirror and see I am to blame for my actions.  Therefore I do not play this game.  Do I look at this problem from the wrong perspective? 

falak pema's picture

Its a step at a time, those who lead us : MAchiavelli's sons, have learnt over centuries, how to match their personal agendas with the general decay allowed to occur to their advantage. Decay is Man's destiny so why fight it is their lucid analysis; use it. 

All very well until the great Ferris  wheel of fortune goes out of control...and it always happens when we least expect it; where we tower like a Colossus over the world; its called hubris. 

M.B. Drapier's picture

Perhaps you missed the chart showing that the ECB is now funding SPANISH banks to the tune of €412 billion

Funding? Come on, you know the issue isn't who lends money to Spain's banks and gets it back - in order to tide them over so that others actually pay for the losses - but who, indeed, is going to pay for the losses by giving the Spanish banks money and not getting it back. The cost of capital isn't even an issue, the ECB being a central bank. If and when the ECB actually takes losses on its (incidentally, illegal) lending to insolvent Spanish banks then the EU core will have actually contributed to the Spanish bank bailout. Until they actually lose money on the Spanish bank rescue in that way or some other, then they haven't.

You may be shocked to learn that the bulk of creditors (and equity holders) of Spanish banks are other Spanish banks as well as the local population both directly and via local pension and welfare funds.

Taking it for granted that the Spanish banking sector as a whole is, well, a black hole, surely the question is, roughly, the proportion of money it owes to Spanish non-bank creditors and equity holders as opposed to non-Spanish (bank or non-bank) ones. Given all those credit inflows to Spain over the past while, I doubt that the answer at all near 100%. Yet the Spanish taxpayer should pick up 100% of the bill for the bailout? Go figure.

Oh and Spain has a massive public spending problem

I don't doubt it. Please, give the Spanish government lots and lots of stick when it cynically understates its deficits, fails to implement agreed cutbacks, and does all the other things that EU "program countries" are prone to do to try to push the cost of their public spending onto the EU core to the maximum extent they can get away with. None of this changes the fact that the EU core is, at the same time, trying to push the cost of bailing out its own banks onto the periphery to the maximum extent possible. It's often not clear to what extent the EU is fighting over one or the other of these issues, partly because both sides often want to muddy the waters. But in this case, the one AEP was writing about, it's crystal-clear that the money which peripheral Tweedledum and core Tweedledee are fighting over is peripheral private-sector bank debt and not peripheral public spending. "But what about Spanish public spending?" doesn't change that.

What is going on now is hope and prayer that everyone sticks their heads in the sand over the threat of M.A.D. because nobody wants to be the one who pulls the pin on the grenade

Sure. But while no-one wants the hot potato to drop yet, no-one wants to hold it for any length of time either. Again, what we have here is the EU core cynically trying to push its share of the bailout shitburger onto Spain, while tomorrow we'll likely see Spain cynically trying to push its share of the burden onto the core. Again, it's not really clear how this makes the EU core the good guys.

And none of this addresses the question of Spain versus Greece. Everything that you have accused Spain of, Greece is guilty of too. The major difference is that Spain has an additional excuse - a partial excuse, as I said above - that Greece doesn't. Yet Greece is a victim but Spain is a simple villain?

One eyed man's picture

It is true that the debtor countries are backing out of the brutal 'austerity' cuts ... but they have more moral right to do this, because those troika-demanded cuts are inhuman and destructive to the peoples of those nations, as ZH has shown. They create death-spirals, as ZH has so well documented in Greece.

So firing a bunch of lazy and overpaid bureaucrats would be "inhuman"? What a laugh!

Actually firing useless government workers and allowing insolvent and dysfunctional banks to fail would be be best thing that Spain could do to begin rebuilding its economy.

If the Germans were smart they would quit the euro. The convenience of a common currency is not worth the price the PIIGS are asking. But this would require the Germans to admit to themselves that they (or rather their bankers) had been suckered by the PIIGS. So my guess is that they will stick it out to the bitter end.

Marco's picture

Austerity in these countries is no different from austerity in a gold standard country. Either way you can't print away the debt overhang ... but it's the ZH concensus that's unnecessary. Austerity should just produce a short sharp depression.

Personally I think the ZH concensus is idiocy and they have blinders on concerning the importance of wealth (land) distribution and of course energy to economic recovery.

Cognitive Dissonance's picture

A paltry $16 Million fine.

At most an hour or two of profit for GS. Put it down as the cost of doing "bidness".

SmallerGovNow2's picture

Ditto, nothing when you control trillions.  Million seconds?  12 days, Billion seconds?  32 years, Trillion seconds? 32,000 years....

Arnold Ziffel's picture

Jail is for 'the little people.'

RSloane's picture

That has never been truer than it is now. You could steal a loaf of bread in California, and if its strike three [you stole milk and eggs previously], you can get 25+ years. You break into a gas station and steal gas because you can't afford it, you get thrown in jail. BUT if you're Corzine or from GS you are punished by being sent to a tropical beach and are inflicted with the presence of girls a generation younger than you who will hand it over for some cash and the good life. I realize there are people out there who are stealing because they want to and are not good people, and should be locked up. My argument is so should Corzine and GS who have stolen millions and millions. No justice, none.


matrix2012's picture

"Jail is for 'the little people."


<Aussie> TOO RIGHT !!!

"We hang the petty thieves and appoint the great ones to public office." -- Aesop

Squid Vicious's picture

I really believe them this time... and so does Mr. Market! yay!

kato's picture

The Telegraph and The Times have horrible/delusional economics writers. But then, so does the NY Times.

spentCartridge's picture


Anatole Kaletsky is a fucking madman.


neptunium's picture

Well that's a fair cop but at least AEP has generally been correct (at least moreso than most of the MSM) in highlighting that the Eurozone was unsustainable and doomed to fail from the outset for several years, it's anyone's guess at this point what the 'failure mode' will be, the bottom line is that nations are acting in their own best interests within an economic construct that to its protagonists is designed to supplant nation-state democracy.

Both the core and periphery are going to be fucked either way, it's going to hit germany hard as an exporter and creditor, at least the peripheral nations, free from the shackles of unpayable debt and with a devalued currency might have a hope of inward investment and would at least be competitive again.

A Lunatic's picture

Pinocchio would be proud.........

gjp's picture

Same question applies to the global trade mess.  Who has the upper hand - perpetually bailout and helicopter-dependent America with its endless trade deficits, or its Asian suppliers who, while admittedly energy-poor have built productive infrastructure (and a few empty cities too) at enormous scale in the past several decades.

American taxpayers will rescue insolvent PIIGS?  Good luck with that.  Those Benny Bux will be worthless by then and America has nothing else to give.

rsnoble's picture

Tax the fuck out of the poor. Great idea. I can't believe the US hasn't come up with that brilliant idea yet.  They're working on it though with such solutions as the carbon tax.  Triple people's energy bill that can't afford what it is now.  That will work great also.

Dr. Engali's picture

The U.S has been taxing the fuck out of the's called inflation and the poor haven't seen anything yet.

unununium's picture

It does look like gasoline could break out to the upside.

CommunityStandard's picture

Inflation is a tax on the poor.  QEInfinity, here we come!

davidsmith's picture

You are using a cannon to swat a fly.  Who reads Evans-Prichard?  Everyone knows he was conceived during a nuclear test.

Bringin It's picture

The funny thing about Ambrose is the way he managed to reinvent himself after dropping the Vince Foster "suicide" story, which he was all over for a while.

ParkAveFlasher's picture

At the risk of sounding ridiculous, I have no idea what any of this means regardless of how well analyzed, summarized, and documented the articles put forth by ZH are along with the comments that follow. 

This is some kind of soap opera right now.  I only brighten up when Bunga Bunga enters the room because that's the guy that gets the chicks. 

I like that picture of the Greek Ministry of Finance.  I'll stick to that for understanding, and Bunga Bunga.

centerline's picture

Yup.  Financial theater up front.  Behind the scenes the "Ministries of Finance" are trashed.  Either they are all working for the same team - or we have a regular Mexican standoff going down.

Pass the beer nuts please.

lakecity55's picture

In The News Today

American Patriots fighting the international banker army, have enlisted the aid of Pancho Villa IV.

"These Mexican fellers shore have a u-neek way of handlin' bankers," said Jethro Bubba, of Anywhere, Mississippi.

Solon the Destroyer's picture

Aww, Bunga Bunga, that reminds me..

So which ex-Goldmanite are we hiring for Premier of Spain?

Cause that's the next step.

slaughterer's picture

"So which ex-Goldmanite are we hiring for Premier of Spain?"

Jim O'Neill can speak Spanish well enough to get along there. 

davidsmith's picture

"how much will US taxpayers enjoy bailing out Spain, Greece, Italy, Ireland etc, if and when Germany does pull the plug."


And don't forget the Illinois teachers' pension plan!  ZH my friend, there's $60 trillion more in bailouts to come, before everything collapses.  Nothing, NOTHING, will stop those bailouts from occurring.

j8h9's picture

Yes, I heard they are going to provide printing presses to each state so we can print more money all over America, save us, Europe, everyone!

Zeilschip's picture

Ambrose Evans-Pritchard = JOKE

falak pema's picture

AEP, the messenger boy, now all confused by the immensity of the conundrum, hanging like a black, menacing clowd over his own world; the one he thought WAS civilization. 

Not that it isn't in substance but is NOT in current manifestation of ephemeral power play...."The US bestrides the word like a Colussus..."

Paul Wolfowitz, 1991, herald of NWO for his Emperor, Bush Snr. 

Brit_Abroad's picture

Another guy who unfortunately hasn't managed to join up all the dots.

Stay behind after class.

gojam's picture

This article a bit harsh on Ambrose E-P, IMO.

vintageyz's picture

ZH gave Mr. "huff-huff hyphenated" Evans-Pritchard a new asshole.  Good rip, ZH

Peter K's picture

AEP unfortunately drank the KOOL-AID. But he wasn't the only one. Peter Tchir did also. Sad, but it happens.

Kaiser Sousa's picture

hey Tyler, and im asking sincerely...

how does germany have the uppper hand if the Piggs can just continue to talk about reform but never seriously implement genuine reform while continuing to be bailed out by Germany or the ECB????

it seems to me until they tell Greece, Spain, Italy, and the rest ur not getting any more worthless Euros unless you cede sovereignty and live like serfs in debt slavery forever they r the ones in control of the situation.......

help me out bro.....