Sabbatical over. Spring in Europe and especially the UK has been dominated by High Pressure (barometric) and attendant clear skies, warm days, crisp nights and in the UK a serious lack of rain. For the most part a very benign outlook on all fronts. But in Rome and Madrid, the auguries are thinking they may be furies after all. Mario and Mariano may be figuring they could tiptoe past the tulips, if not the graveyard, by talking austerity and sounding reasonable – even cocking the odd bon mot in the direction of Brussels. But the flame of Teutonic orthodoxy appears to burn there brightly yet, and now even the stolid burghers of the Low Countries (Les Pays Bas) are discovering they may need to try a little of their own medicine.
Les Bourses Européennes took serious fright today. Capital flight is going to take off like a rocket.
The new ghastly numbers for the Unfertile Crescent (aka Club Med), are now 25 over 50. That’s 25% unemployment and 50% for youff. And that’s only those registering for the dole. Employment is crashing and underemployment, not recognized in these terrifying parameters of despair, is soaring. In the meantime Mario & Mariano have also to try to tiptoe past the Syndicati before the Anarcho strain reappears; which is quite another matter. The sword of Merkelian Damocles hangs sharp and low above their heads. Must make being between the Devil and the deep blue sea, or between a rock and a hard place, seem quite comfy. In living memory Gli Brigate Rosse terminated Aldo Moro with extreme prejudice.
So it could be a race between Italy and Spain as to whose 10 year bond yield will breach the magic 7% first and which one of them scares the Brussels/Frankfurt/Berlin axis most. The race looks more like being a sprint than a Marathon (pace Greece). With Mario’s (Draghi) LTRO round tripping exhausted, it’s shaping up to be the day of the Bond Vigilantes again. Meanwhile Bunds yield 1.6% and UK gilts not much more than 2%. Go figure.
What a blessing that lovely Christine Lagarde seems to have foresworn the Chicken Little role for the time being. She’ll be back with silver tongue soon enough, importuning the taxpayers of the IMF to bail, bail, bail the saintly Project (aka the Eurozone). Ta gueule, Madame.
It’s shaping up to be very, very nasty – so fasten the seat belt. Serious turbulence can arrive from clear blue skies.
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