More Gruel, More Gruel

From Mark Grant, author of Out of the Box


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.

More Gruel Please Sir

I am reminded of that famous scene in Oliver where a second serving is asked for and the commotion that it causes. The European Union can now be viewed as three distinct groups. The bailed-out countries that are trying to renegotiate their agreements, pleading for more money, and asking for more integration in the hopes of getting more gruel. This is all characterized by some grand plan of course so that they can con the wealthier nations out of their money under the banner of the Three Musketeers, “All for one and one for all” which really just means; “give me your money so I can live just like you do and thank you so much.” Then the second group is the Brussels Sprouts which want to take over power from all of the national governments and run Europe out of Belgium and wave flags, have parades and dine on Beluga caviar accompanied by splits of champagne. They believe their own rhetoric and think that Europe is going to be some commonality where the people in Berlin and the people in Lisbon have the exact same standard of living and I think there will be a revolution in Germany before that is allowed to happen. Then the final category is Germany, the Netherlands, Finland and Austria which everyone else wants to pay for this enterprise as Germany passes out just enough to maintain control and makes certain well defined noises to keep everyone begging for more while they refuse to partake in any of the nonsense bandied about by the poorer nations as they are not going to destroy their own economy for the sake of some grand scheme that would raise their cost of funding to an average of Europe while lowering their standard of living to a mean of Madrid and Athens; it is just not going to happen and no delusions should be maintained.

It is not that hard to figure out, this dis-jointed Europe, just watch what the Germans actually do and don’t pay too much attention to what they say; that is the trick of it. The whole thing is a double con game but the people with the money, as in the rest of life, are who is in control and not the beggars with outstretched hands hanging about on the corner. Spain has fallen, Italy is under siege and France wants to join the have-nots in the hope that Germany will pay for all of the promises made by Hollande to the French people during their election. As Italy falters France may be the next nation to come under closer inspection especially if Hollande proceeds to implement more government spending and the lowering of the retirement age along with his other Socialist programs. Again I remind you to pay little attention to the rhetoric but watch what Germany does and that will set the program for the future. They can vote all they want in Brussels and draw up all kinds of grand plans they desire but if Germany does not want to accept them then it is little more than semi-polite conversation over well-dressed cucumber sandwiches in various capital of Europe.

June 17

This is the day of the elections in Greece as Democracy rears its ungainly head. One way or another; the outcome is likely to be unsettling. If the leftist party wins then a game of chicken will ensue with Germany doing a down and dirty calculation on how much it will cost them and offering just that much and no more. Then the young leader of the new Greek government will probably overplay his hand and Germany will turn off the monetary spigot. This will then lead to a second game of chicken where Germany tries to get Greece to leave as Greece dares them to throw them out. The rhetoric will get quite testy and we will all watch to see who blinks first. Greece will regain the spotlight but the cost of the performance will be high. There is $1.3 trillion riding on this bet which is the total amount of Greece’s unpaid bills and a default will cause havoc past what I think the Germans will calculate. Europe seems to believe its own jargon these days and I fully expect any EU offers to miss the mark by a wide margin and then the demons will leap from the Trojan horse.