European Union

Perhaps all of this has gone on for so long, or perhaps because we keep hearing the cries of “Wolf” each week for the last several years, that the markets are impervious to any new cries for help. An odd kind of complacency seems to have set in where nothing matters too much and everything will just be fine. Yesterday’s equity market rally based upon the central banks providing liquidity is just what any serious observer would expect and yet the stock markets rallied as if this was something out of the ordinary which clearly demonstrates either the market’s lack of understanding of real world events or it represents the hype of some hedge fund that was tossed around in the media like it was a new product at Apple. In any event, don’t wake up on Monday morning and think that Greece will have left the Eurozone and returned to the Drachma. That is not how things will play out. In the final analysis it probably all comes down to what price the Germans are willing to pay for dominating Europe.

While by now virtually everyone around the world is intimately familiar with the nuances of Greek electoral law, knows the names of Greek politicians better than of those at home, and is all too aware of the broader media propaganda that unless Greece does as the banks demand the world as we know it will end, one aspect of the Greek collapse into hell has gotten lost: the complete failure of the Greek healthcare system. As the following Reuters report shows, regardless of the outcome on Sunday, it just may be too late to preserve the future of Greek sickcare, and with that, of the entire population: "The country's state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors as a combination of economic crisis and political stalemate strangle health funding. "It's a matter of life and death for us," said Persefoni Mitta, head of the cancer patients' association, recounting the dozens of calls she gets a day from patients needing pricey, hard-to-find cancer drugs. "Why are they depriving us of life?"" They are depriving of you of life, Persefoni, because in old times, when a given country was enslaved, there was a specific aggressor that the people could revolt against. Now, when the slave-master is debt, and thus one's own desire to live beyond their means, it is far more difficult to look in the mirror and to revolt against what one sees. Which is why, one day at a time, the Greek civilization will continue to suffer the terminal consequences of infinite debt serfdom, until finally, after two thousand years, it no longer exists.

All you need to know.

• Greek Banks Under Pressure (WSJ)
• France Seeks Eurozone Stability Package (FT)
• Germany Dashes Eurozone Expectations (FT)
• Geithner Says European Leaders Know They Must Do More (Bloomberg)
• In Athens, Party Aims to Delay Austerity (WSJ)
• Rajoy Battles ECB for Loans; Monti Appeals for EU Action (Bloomberg)
• Nokia Slashes 10,000 Jobs, Cuts Outlook (WSJ)
• H-1B Visas Hit the Cap, Sending Companies to Plan B (Businessweek)
• Swiss National Bank Vows to Defend Currency Floor (WSJ)
• Euro Crisis Deeper With Moody’s Downgrading Spain, Cyprus (Bloomberg)
• When all else fails... Truckers As Leading Indicator Show Stable U.S. Economic Growth (Bloomberg)

Gold rose $11.40 or 0.71% yesterday in New York and closed at $1,611.60/oz.  Gold started out trading sideways in Asia and then edged up in early European trading.  

It is really rather pathetic. The Prime Minister of Spain today called for a deposit guarantee fund, pleaded for the EU to take over the budget of Spain and said Spain would cede its sovereignty over its banks. This is all just one thing; a cry for money and money at any cost. The poor fellow has obviously lost whatever self-respect that he had and is behaving no differently than some street urchin begging for alms. What can be seen from this kind of behavior is the desperate state that Spain is in and it is reflected in his desperate pleas for help. I would speculate that so much has been hidden and so many balance sheets falsified that Spain has suddenly found itself in a sea of their own making which could be termed, “Dire Straits.” When Rajoy termed the bailout for Spain as a “Victory for Europe” I knew that he had left “sense and sensibility” behind and headed into the land of Don Quixote where windmills were imagined to be giants and fantasy had replaced reality. The problem is, unlike the creation of Miguel Cervantes, this guy is the Prime Minister of Spain and not some aged senior chasing after the Knights Templar in his later years.

All you can read.

One minute you have it, the next minute you don't. Nowadays you never know if the money you have in Europe is really yours or not. From instantaneous debt subordination to capital (flight) controls, things are starting to look ugly!

Here we go:

• EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE - RTRS
• IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING - EU SOURCES - RTRS
• SUSPENSION OF SCHENGEN ALSO DISCUSSED

In other words, that money you thought you had... You don't really have it. We can only hope this message was not meant to restore confidence and prevent future bank runs. Because if Europe wanted a continental bank run, it may have just gotten one.

This is getting scary very fast.

... And what Germany wants, Germany gets. Sorry Spanish bondholders.

Spain marks the fourth bailout during this Euro Zone debt crisis saga, after Ireland, Portugal and Greece, and may need more aid, while Italy is looking good to be the fifth bailout candidate

For those of you that keep waiting for some giant change-the-world event; I invite you to re-gear your perspective. Greece has fallen, Portugal has fallen, Ireland has fallen and now Spain has followed the road into Purgatory. These are significant events that are, in fact, changing the world though none has caused Armageddon to date though they may by their aggregate but not singular importance. This is also why Greece is of such key importance; it has nothing to do with staying in or out of the Euro or of the preservation of the European Union as a political entity. That part of the equation is barely relevant. What is of critical importance though is that if they leave the Euro that they will default on some $1.3 trillion in total debt that can be afforded by no one. That is the rub and you may ignore the rest of the Eurospeak that is bandied about from Brussels to Berlin. A default by Greece will bankrupt and cause re-capitalization at the European Central Bank, it will throw the IMF into a tailspin and it will play havoc with Target2 and the German Central Bank. Do not allow yourself to be taken in and mis-directed; this is THE issue and the only issue of real importance.

And another bank does a book report on our Saturday post explaining the Spanish bank bail out. At this point, it should be all too clear how Spain's only solution to being in a very deep hole is to keep on digging.

All you need to read and some more.

Discord, the endlessly rising costs of keeping it alive, and threats of extortion.