Regarde Lagarde

An update on our Christine special.

http://www.telegraph.co.uk/finance/economics/9298501/Christine-Lagarde-attack-on-Greece-backfires-as-she-pays-no-tax.html

Poor Christine has had to eat some Euro-Crow over Facebook (how about that IPO, Mr. Suckerberg?). Hard to know why she didn’t stick to her guns. But as we recall from little tax-cheater Geithner (head of US Treasury and IRS); pols who live in glass houses shouldn’t cast the first stone (pace mixing of metaphors).

Christine is a member of the international Euro-Élite, so surely no one expected her to be involved in anything so plebeian as paying taxes. That’s only for the little people (to quote the charming Leona). All civil servants pay and perks should be tax free. Look what a bang up job they are doing. They are of course also now our civil masters; so all the more reason to keep them in the style to which they have become accustomed. Maybe a little humility will creep into Christine’s utterances as she reflects on the dire straits that hubris and Gallic sex appeal have visited upon her predecessor.

Really a quiet entre-acte in the Euro-crumbling soap opera today. The Irish voted (a handful of them). The majority probably stayed home. The outcome has not yet been vouchsafed; which in any event is of little if any consequence. The Irish part of the saga is now in the rear view mirror and it’s Spain’s turn sitting above the dunk tank. Friday in Europe will soon dawn; where all the Euro-pols are praying they can make it to the weekend without a major disaster and maybe Monday will never come. Two big holidays to kick off the week in London for Her Majesty to cruise the Thames in her new special barge. That’ll take everyone’s mind off reality for a couple of days. Which gets us to Wednesday, by which time anything could happen in Euro-land – Deutschen Herzen könnten in eine Berline Frühling Minute schmelzen, vielleicht.

How long can this show run?

Simon

http://www.telegraph.co.uk/finance/financialcrisis/9301270/Spain-faces-total-emergency-as-fear-grips-markets.html

It’s been a bad day (Wed) in the markets (except for the $/€) in case you hadn’t noticed. Including oil (down – which makes it a good day), and little movement in gold.

Ambrose tells us the proximate cause is chaos in Espana. The Greeks are already in purgatory; awaiting the crossing to Hell (scheduled for June 17) and so the dreadful speculators (you know who you are Georgie Soros) have decided it’s time to dunk Spain in the barrel and see how much water-boarding Rajoy can take. One might have thought they’d pick little Portugal off first, but evidently the decision has been made to castrate a big bull and just outflank Lisbon – leaving it as a morsel to be mopped up by the reserve divisions. First the Picadors, then the Toreadors and now the Matador with the coup-de-grace. Watch for Rajoy’s ear being held aloft any day. Probably on account of it being hard to figure who owns how much of whose worthless bonds between the Spanish Sovereign and its banks. (Remember the Irish banks). I suspect King Juan Carlos can hang up his African hunting double rifle permanently. Taking in one another’s dirty laundry never added much to GDP nor to sound money.

As Ambrose correctly observes, the Euro is now doing for Europe what so many of its anti-prognosticators, Jeremiah’s, lunatic Euro-sceptics, and other low forms of economic punditry and Little-Englander pond scum (including your humble blogster) have been saying for as long as EMU was a glint in Jack Delors eye; to wit, driving the constituent nation states apart and continuously amplifying the mutual invective. Murphy’s Law of unintended consequences is un-repealed. The Euro-Toast is going to land marmalade side down. The Spanish Prime Minister is at the end of his rope (the Guv of the Banca de Espana has quit), Greece doesn’t have a PM, and their respective peoples are now screaming for relief from whatever it is that ails them – relief which they all believe should take the form of Berlin sending over bundles of X series Euro’s until they all feel better and can go back to their siestas in peace. All dressed up as some flim-flam scheme to self-inject (mainline I think the term is) bundles of pieces of paper that start with “I promise to pay …”, which can then be hypothecated, traded, reinjected, discounted, coupon-clipped, disintermediated and defeased until by some miracle they wind up via Mario Draghi’s ECB in the vaults of the BuBank. Euro-prestidigitation raised to the high art of the illusionist. All will then be well. Save for one small problem. Die Frau Angela and the BuBankers saw the wheeze coming and have slammed the window on Rajoy’s fingers. Which has set him off screaming again.

http://www.telegraph.co.uk/finance/comment/jeremy-warner/9301204/How-much-longer-will-the-ECB-refuse-to-come-to-the-rescue.html

Jeremy can see Eurogeddon in his crystal ball. Some punters are suggesting the world will end on June 17^th (right after the Greek election Round 2 – the wrong result may make Round 3 moot). Probably worth a flutter. The poor Greek pony is going to pull up lame; whatever the punters may predict. The € closed under $1.24. How crazy is it that Germany has a depreciating currency? The Swiss are trying to staunch the flow by threatening inward capital controls and negative interest rates (again). Just as well that Spain has no Swiss border but the Italians know where to find Lugano.

The Euro-conundrum is, as Jeremy plainly states, now exposed in all its ghastly inevitability. What was designed by the Utopians to bring together is driving asunder. Running room for demagogues of all persuasions is opening up. All must still claim to love the Euro and it must be saved at all costs. But no one is able or willing to pick up the All Costs tab. And who can blame them; when All Costs is an unbounded, unknowable, unpredictable but definitively a very large sum indeed. Nor borrower nor lender be. Yet they say the Irish will follow their leader (lemmings) and like turkeys vote Yes for Christmas tomorrow.

Farce sinks into tragedy; a state of affairs where Schadenfreude has no place. It can only end very, very badly for everyone – and that just the financial and economic chapter. The political chapter becomes incalculable. The democratic deficit is off the charts. Unless, unless Die Kanzlerin is wrestling with the biggest U-turn in Euro-history. If she is, she’s left it until mere seconds before the final curtain. Somehow that outcome strikes as unlikely; even for those who don’t believe it would amount to kicking the can one last time.

Simon

La Belle Dame sans Merci

http://www.telegraph.co.uk/finance/financialcrisis/9291516/Christine-Lagarde-Greeks-can-help-themselves-out-of-the-crisis-by-paying-their-tax.html

http://www.telegraph.co.uk/finance/financialcrisis/9291965/The-disarming-charm-of-Christine-Lagarde.html

http://www.telegraph.co.uk/finance/financialcrisis/9293602/Irate-Greeks-vilify-IMF-chief-on-Facebook-after-she-brands-them-tax-dodgers.html

http://www.telegraph.co.uk/finance/financialcrisis/9295928/Greek-promises-of-tax-crackdowns-fail-to-bite.html

Time for our Memorial Day Christine Special.

For those of you who cannot get enough of Christine this lovely holiday of unbroken Sonnenschein in California and a heatwave (phew what’a scorcher) in the UK here are some delightful photos of the éminence grise elle-même; avec et sans foulard. Une trés belle Pêcheure des Perles.

In this installment of Euro-Tragedy, she’s chewing up and spitting out Greeks for their congenital inability to find a tax demand they like. It may be better for Ms. Largarde’s security that she eschews the Diogenes wander around Athens as there are reported to be 10,000 Greeks angry at her effrontery in chastising their manhood and propensity to pay taxes. Can there be 10,000 in Greece who pay all their taxes? Better Christine writes a billet doux to her friend little tax-cheater Geithner c/o US Treasury and check that he’s up to date with the IRS. Clearly the Greeks find Christine less than disarming and charming.

Evangelos (the Evangelist?) Venizelos, (PASOK Socialist party leader, ex finance minister and fat man), fresh from helping Papandreou drive the Greek state into the ditch and trailing badly in the polls for the Greek election (Round 2) says Christine has insulted the Greek people. Quel horreur! The Greeks had better not elect fat man Vangy as PM post Round 2 (will there be a Round 3?), or he’ll be fearfully embarrassed having to sit down cap in hand with Christine at the IMF later in June.

Well, I hope Christine is enjoying her well earned Memorial Day holiday rest before she returns tomorrow to the all-important job of saving the Greeks from themselves and the Spanish state from following Greece into the ditch. Is she reflecting on the possibility that the Euro might not have been such a good idea after all, and maybe, just maybe, she should show her independence and intellect by taking the Friedmanite line; especially now her marionette master, little Psychozy, is safely in the arms of Carla in one of the King of Morocco’s palaces and nowhere near l’Élysée? Maybe she should float the idea to that other ravishing Euro-Pol, Frau Angela of Berlin, that the Germans might want to float up, up and away from the Euro with the Deuro perhaps (along with their friends the Finns and the Dutch) and leave the world to darkness and to Hollande. That would put the BuBankers into a new form of Angst, Sturm und Drang.

Just a reminder you can tune into my blog – where all these rantings are now posted for posterity at http://imeffed.blogspot.com/  Your comments would be very welcome, but please – just don’t insult the Greeks. That’s Christine’s job.

Simon

Dommage à Catalonia

http://www.bbc.co.uk/news/business-18186977

http://www.bbc.co.uk/news/world-europe-18187830

http://news.yahoo.com/putins-support-sliding-crisis-ahead-think-tank-183745965.html

This is an interesting piece about Vlad Vlad Pooh-Bah of Russia, (the Lord High Everything Else) and his Ko-Ko San (Lord High Executioner), who has been elevated from Chief Head Cracker of Moscow to Chief Head Cracker of All the Russias. Vlad’s standing is under serious pressure with the middle class and intelligentsia. (The oligarchs of course remain loyal – Mikhail Khodorkovsky is still in the Gulag to keep them in line). It’s a story to take your mind off the relentless ranting of the Euro-Lunatics (who as Gauleiters of the Euro-Asylum are nominally in charge) running all over the Continent making ever more desperate statements about Greece. Mario 1 Monti, with an assist from Mario 2 Draghi, is in full cry now with Hollande and Rajoy on the red herring issue of “Eurobonds”; which have become the Euro-Panacea del giorno. Krugman pretends to give them Nobel quality intellectual cover (see below). The € is now trading at around US$1.25 – so nothing is new. Still massively over-valued for Club Med and massively under-valued for Club NordSee/Baltic. Of course “austerity” is not the only remedy – but without discipline and arbeit on structural reforms in the labour markets and welfare systems of Club Med; all else is window dressing les boutiques on the Titanic. Their “more of the same” remedy – which Mario² seems to advocate - is ipso facto Boris’ pedal to the metal when confronted with a brick wall. That’s probably unfair to Draghi but he has to show some solidarity with Mario 1.

Poor Sn Rajoy cannot catch a break. His utterances get ever more desperate and pleading. Bankia and now Catalonia with begging bowls out in Madrid and the ten year yield rocketing above 6% again. (It’s an interesting question as to why Euro-Kant says that 6 – 7% bond yields are the danger zone and worse. When RR came to the White House after the exciting Carter years, I recall long dated Treasuries trading nearer 15% and Primes at 20% plus. Which heralded one of the greatest of all US recoveries). Where is Paul Volcker when we need him at the ECB? Good German name should reassure Berlin. In Euro-Fantasyland we have the Van Rumply-Barroso vaudeville, tap dancing, Uriah Heep act.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9288812/Europes-slump-deepens-as-Kabuki-summit-falls-short.html

http://www.telegraph.co.uk/finance/economics/8647879/Britain-cant-afford-to-fall-for-the-charms-of-the-false-economics-Messiah-Paul-Krugman.html

The latest Athens bulletin is that tax receipts in May are running 20% down yoy (2011 was no picnic). One imagines that citizens with €’s are a) not paying their taxes (no change – keep your powder dry), b) moving them to higher ground. All funded by Mario 2. This is utterly logical behaviour for Greeks. When/if the Drachma rises like a Phoenix aus der Aschen, the flow will reverse rapidly once the market finds a level.

Meanwhile the Swiss (not members of the EU, the Eurozone or other Marx Brothers style clubs) but surrounded by mayhem, sail serenely on.

A very happy Memorial Day to you all.

Simon

Rauch und Spiegel

http://www.telegraph.co.uk/comment/columnists/borisjohnson/9278862/Europe-is-driving-full-tilt-foot-on-the-pedal-into-a-brick-wall.html

http://www.telegraph.co.uk/finance/financialcrisis/9283417/Japans-fiscal-death-is-a-warning-to-the-West.html

http://www.telegraph.co.uk/finance/financialcrisis/9283191/Angela-Merkel-astonished-by-austerity-debate-as-Germany-left-increasingly-isolated-on-eurobonds.html

http://www.telegraph.co.uk/news/worldnews/europe/9276543/Europe-finally-awakes-from-its-utopian-dream.html

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100017364/papademos-grexit-and-catastrophe-blackmail/

http://www.telegraph.co.uk/finance/financialcrisis/9286309/Debt-crisis-Germany-holds-a-gun-to-Greeces-head.html

You only need to read the URL’s above (and not follow the links) to know for sure that we are well into the end game of the Greek chapter of the disastrous Euro-Project (Chapter 2 goes Portugal, 3 Spain, 4 Italy, 5 France. Ireland will rejoin the UK). The horrible realization is dawning on all sides that Delors and Co designed a ratchet (aka a racket) that would deliberately navigate the collective flotilla of Euro-States up a blind creek without the proverbial paddle. No room to turn around, no way back, no escape hatch. Whereupon Fritz the BMW worker would discover that he is being bounced into a Federation of which he wanted no part – since it inevitably involves shipping large quantities of his Dm type readies to Greece and all points Club Med in perpetuity. The citizens of which won’t even say thank you and are absolutely convinced they are entitled to no less – in fact more, more, more. Retire at 50 after shuffling paper for two hours a day for 20 years and drinking Ouzo for the rest and sending the bill to Berlin. Prussian guilt meets Teutonic frugality. Anything could happen and probably will. Greece is a total basket case, which is nothing new. Nice islands, good beaches and a mono-economy based on tourism (with a bit of shipping run by expat Greeks living in Belgravia who pay only modest taxes, and those to HMRC). Except when a large number of your customers are those very same Fritzes the BMW worker, it’s not good marketing to shout about arrogant, heel-clicking Germans not paying at least twice for their vacation in the sun.

What all this means is anyone’s guess. The crisis is now being spun as a test of “austerity” versus “growff”; which of course is just the über-Keynseian free-lunch crowd (Krugman, Rajoy, Monti, et al) talking their book (Berlin to send more moula via Frankfurt). It is of course an utterly false trade-off and neither is the simple answer. Indeed there is no simple answer. Keynseian demand management by government deficit spending might be part of an answer if everyone hadn’t spent the milk money long ago and been borrowing it for years. The only answer is “you sure as shoot shouldn’t be trying to re-start this wreck from here”. Boris is right. It’s a brick wall. The neo-Keynseians have no comprehension that the sole source of “growff” is private capitalist investment with a reasonable expectation of a satisfactory risk/reward. More private employment, less workers at the state trough. But that means structural reforms that are very hard to deliver in any modern democracy (see Japan). Any sovereign state “enjoying” 50% plus youth unemployment should figure out that something is not right in the Kingdom of Denmark and take steps. No such luck. The syndicati and public sector unions rule. Luddites to the core.

So the deadly game of undeclared chicken goes on. How will the Greeks vote, how will Frau Angela handle the pressure of being isolated by the tax (which no one pays) & spenders, will the ECB provide liquidity to Greek banks through the election (or will the BuBank slam the window first)? We won’t know until it happens and nor will they. It’s totally in the lap of the Gods. Those whom they wish to destroy they first place in monetary union. My money (a few Euro’s denominated with X and N serials – Germany and Austria respectively) is on the Germans concluding that tho’ the Euro may be good for them in many respects, it’s not enough to prefer the unlimited free lunch program for the whole of Club Med in perpetuity. Having said that, they certainly fear being branded by the free lunch crowd as obdurate wreckers of the house that Jack (Delors) built; so for a while they may allow some papering of the cracks and end runs around the ECB charter, treaty clauses and ECB constitution; but 2/3^rd of a vote in the Bundestag to gut the FRD constitution and federalize the Eurozone isn’t going to happen. The rest is Rauch und Spiegel.

What is Milton Friedman thinking to himself as he watches from monetarist economist purgatory?

Simon

Putting in the Bootle

It’s OK then. The combined brilliant minds of the G8 (which of course includes our cuddly KGB friend, vote-cheater Vlad Vlad Pootin and little tax-cheater Geithner) say Greece should stay in the Euro. All scripted no doubt by the lovely Christine. She’s flashing her charms off-stage and Dodgy Dave Cameron has fallen hook line and sinker (he’s on the rebound from Rebekah of course, now the Old Bill has felt her collar again – so we should be charitable. This is really little Georgie O’s game). So the Greeks can breathe easy again and do what Christine tells them: which is to vote in that nice cuddly Evangelos Venizelos in June. She’s asked Vlad Vlad to divert via Athens and show the Greek PASOK socialists how you can win 107% of the vote in a province where you’ve recently shot all voting age citizens. Problem solved. Now all we need to do is drone the mantra of “growff” and wait for our collective Nobel prize in the mail. Of course Die Eiserne Kanzlerin is going to have a snit and try to explain that the Prussians know more about “growff” than the rest of the Motley Crüe put together and it’s done with austerity, balanced budgets and arbeit (plus a grossly under-valued, bugger-thy-neighbour exchange rate helps).

So one must assume that the G8 (ohne Deutschland) will put their money where their mouths have been and leave Christine with a blank check payable in perpetuity to the Greek Treasury? No fools those Greeks. Nice islands too. Shame about the Retsina. Will they (the G8), hell! Which means they are consciously mouthing platitudes and trying to get the heck out of Camp David before Christine plants both hands on their shoulders and flashes her charms. Talking of charm, I hear Van Rumply and Herr Schäuble are joint winners of the G8 MVP funny-men award for hinting the EU, the Eurozone, the ECB, the world economy, the BuBank and the EBRD will be just fine right after the Greeks have been ex-fenestrated from the world. Of course what they all mean (G7 out of G8 – excluding Germany) is that it’s very important to stop the Euro-rot before Greece reverts to the Ottoman Empire; so important that Germany must pick up the tab (the Dutch and Finns can help if they feel so inclined). So the irresistable force of Euro-Socialismus, debt mutualisation, Euro-bonds, spenders over savers/arbeiters meets the immoveable (maybe) object of Die Kanzlerin and her remaining ability to govern by the German constitution. It’s billed as a heavy-weight match over 15 rounds, no TKO’s, no submissions. With Hollande now leading the deficit spenders it must be lonely at night in the Berlin Bunker with only BuBankers to talk to.

http://www.telegraph.co.uk/finance/comment/rogerbootle/9277943/The-most-pro-European-thing-to-do-now-is-reject-the-euro.html

Bootle right on as always.

Zero statesmanship on all sides means it can only get messier, nastier and spread misery all around the world. The Euro-Fathers (that’s you Jack Delors) will have a lot for which to answer on Judgment Day.

Now they’ll send Vlad Vlad home and try to fix NATO.

Simon

Brief aus Luzern

Eh bien, mes braves. Ce serait aux barricades à bientôt. Francois goes to Berlin and beams at Merkel while having his cake and eating Marie Antoinette’s too. Plus ça change. Laissez les tombereaux à rouler.

http://www.telegraph.co.uk/news/worldnews/europe/greece/9268507/Greece-on-brink-of-collapse.html

The Greeks have voted but, as always with EU matters, they got it badly wrong the first time. So they must suffer the mandatory do-over. Likely they’ll get it wrong again. Christine’s sky is going to fall on all the Euro-Chicken Littles.

M. et Mme. Carla Bruni duly vacated l’Élysée never to be heard of in polite society again. Tant triste.

There are now countless (count’em) Euro Chickens in full cry ohne Kopf. No one knows what’s coming; especially Mr. Tsipras. Friends tell me that the Iron Chancellorin will have a Damascene experience at one second to midnight on the way to the BuBank and stand Weidmann down; while she tells Mario at the ECB to accept all and any collateral, however dodgy, print like he’s never printed and bail, bail, bail. Ship unlimited Deutsche-Euro’s (the non-dodgy kind) to Athens and tell them not to mention it. All in a solid day’s work in Euro-Solidarity, all in Germany’s best interest anyway, have a nice day. Problem solved. Except my best guess is that Die Frau ain’t gunna do it. Dieses Mädchen für umdrehenden ist nicht. German constitution says verboten. Die Frau follow constitution – stay out of Spandau.

http://blogs.telegraph.co.uk/finance/jeremywarner/100017174/this-is-how-the-euro-ends-not-with-a-whimper-but-a-bang/

Going out on a limb, I’m with Jeremy Warner. The Athens sky will fall before the do-over comes to pass. The canter on the Greek banks will become a gallop. They will close sine die. A very hard landing indeed. Italian and French banks will join Spanish banks in purgatory. It will make the collapse of Weimar look like a walk in the Bois de Boulogne. Greek economy returns to barter. The neo-Ottomans cannot believe their luck. Looks very dodgy for Cyprus too.

http://www.telegraph.co.uk/finance/financialcrisis/9268330/Italys-banks-shaken-as-economic-slump-deepens.html

The Greek goose is arguably at the very well-done stage. Can the other Club Med banks whistle past the graveyard without running out of paper-Euro’s? Can the Clearing House take the strain without the BuBank closing its window (and the BuBankers jumping through it)? Will it be sauve qui peût for Italians, Spanish, French, Maltese (don’t forget the poor Maltesers close to the Libyan coast) and capital flight across the northern borders à l’outrance? Here in Luzern in der Schweiz the doors of UBS and Credit Suisse look forbidding but are doubtless open to anyone with a pocketful of hard currency (the Euro?). Down in Lugano it could become a mêlée. For the moment happily the Swiss seem to be accepting Euros; at least for a cup of coffee. Die Dämpfer jetzt gleiten dem See darüber. Cowbells chime as ever. Very serene scene here in Switzerland.

Hats off to the Irish who seem to be dodging the eye of the storm. Must be the bracing quality of the north Atlantic, North Sea and Baltic.

We are now most likely very close to the beginning of the end for the Euro. It will take supreme statesmanship from Merkel, Draghi, Lagarde, little tax-cheater Geithner (AWOL), Hollande, Monti, Rajoy and others to avert a train wreck (the SBB will run on time to take us to Wengen tomorrow). Forget the Greeks – they should be focusing on the post-mortem. Not to mention Juncker von Juncker and Herr Schäuble – who seem less than well disposed towards Club Med. It’s hard to imagine this cast of characters getting any kind of act together this side of hell freezing over Europe.

Le ciel se tombe.

Simon

pbG's

http://www.telegraph.co.uk/finance/comment/rogerbootle/9263156/The-final-death-throes-of-the-euro.html

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9263196/World-edges-closer-to-deflationary-slump-as-money-contracts-in-China.html

Frau Angela did indeed suffer a serious mauling in Nord Rhein Westphalia yesterday; not however for giving away the farm to the Greeks, but, shock-horror, for preaching austerity not only to Club Med profligates but to the hard-working Germans themselves. Whoa! If the Germans can’t take a mild dose of the medicine prescribed by Tante Angela (egged on by the SDP) and the French have given up before they’ve even started, why should the pbG's (poor bloody Greeks) and other credit maxed out Club-Med members take a mega-dose that many suggest might be toxic, purgative, and far from therapeutic. The famous Tsipras diet. Except all this anti-austerity bandwagon is fatally predicated on Fritz the BMW worker picking up the tab. I’m fairly certain Fritz ain’t gunna do it à l’outrance (as Ambrose would say). Sorry François. So we all agree too much austerity can be very bad for one’s health, but too much debt financed “growth pact”, aka incontinent spending in the public sector and rampant tax evasion/avoidance, could well be terminal.

So watch for a steady flood of capital flight heading north, draining the life out of the flabby under-belly of Europe. It will build to a crescendo until every Euro not nailed down (or printed in Greece) will be in the BuBank.

François will try to beard Frau Angela in her den on Tuesday. The fur may fly. Who will come out standing? Will die eiserne Kanzlerin break as she’s left alone in her corner? Will François head back to Paris to declare “peace in our time”?

The markets will have a lot to say this week. Watch out below. The perfect storm is just below the horizon.

Simon

Une Hégémoniste Allemande Malgré Elle

http://www.telegraph.co.uk/news/worldnews/europe/greece/9233670/Greece-tries-to-crack-down-on-fraud-as-mayor-of-Zakynthos-faces-revolt.html

http://www.telegraph.co.uk/news/worldnews/europe/9233096/Europe-alienates-us-all-as-foretold-40-years-ago.html

http://www.telegraph.co.uk/finance/financialcrisis/9233886/Could-democracy-derail-the-euro.html

A great piece by the Canadian Finance Minister. The Canadians took their medicine some years ago (along with the Swedes) and are much the better off for it. So they are well placed to prescribe the same treatment be ingested by those suffering similar ailments.

http://www.telegraph.co.uk/finance/financialcrisis/9238854/The-eurozone-should-sort-out-its-own-mess.html

My favourite member of the UK Labour Party/Trade Union alliance - Dan Hodges - telling Francois Hollande that he can make as many ridiculous promises to the French people as he may choose. It will make not a hill o’ beans difference to the music the French will ultimately have to hear play. For the moment they have voted for the tooth fairy approach to economics; accompanied by making like the ostrich, placing their hands over their ears and singing la-la-la. It will afford them nothing but a bigger dose of heartburn in the fullness of time. Time which will not be very full.

http://blogs.telegraph.co.uk/news/danhodges/100156726/le-grand-mensonge-why-francois-hollandes-end-to-austerity-message-is-just-smoke-and-mirrors/

http://blogs.telegraph.co.uk/finance/timworstall/100017007/why-the-euro-is-doomed-to-fall-apart-it-was-an-incredibly-stupid-idea-in-the-first-place/

Le dénouement de Paris ést complét. Being President of France is like being Governor of Illinois or of Haiti or PM of Italy. You have to be a crook even to apply. In due course you get found out, indicted and given a slap on the wrist (sorry Blago – 14 years in the big house, aka the Pen). Sarko is traveling a well-worn path from the Elysée to the dock. De Villepin, equally nasty, but more clever than Sarko, will be laughing all the way to an Énarque réunion.

http://www.telegraph.co.uk/news/worldnews/nicolas-sarkozy/9255097/Nicolas-Sarkozy-faces-questioning-in-raft-of-investigations-as-immunity-ends.html

Spain takes another look over the precipice.

http://www.telegraph.co.uk/finance/financialcrisis/9255621/Spain-nationalises-Bankia-as-euro-crisis-escalates.html

Well the Greeks also voted. We know not for what. Not fat-man Venizelos of PASOK (failed). Not for Papademos the EU technocrat (failed). Not for Samaras and a return to some semblance of rationality. Not for Tsipras the Leftist firebrand, not for any of the above. Only they gave the neo-Nazis and the Commies a big vote of confidence. Poor old Carolos Papoulias might as well give it a shot and rule by decree. No one else has a prayer. The constitution says another election in three weeks. By which time of course the Greeks will have come to their senses and vote for …. More of the same? Maybe they’ll just vote with their feet (like lemmings).

So the dominoes are really falling. Sarko gone, no Greek government, no Dutch government, Merkel about to get an electoral bruising in Nord-Rhein Westphalia for being too generous with the Deutsche Euros to Club Med, and Rajoy is getting busy finally taking Spain’s bust banks onto the State’s books. (Where he’ll find a boat-load of his own government Bonds (worthless)). The sky could well be falling. What we really need is a full frontal Christine Lagarde au foulard to ride to the rescue. Don’t count on it. She may have little Georgie O’s 10 billion quid from John Bull taxpayer but her Louis Vuitton begging bag has a hole in the bottom.

The scene of this tragi-comedy (of errors) now switches back to the Frankfurt/Berlin axis. The play that sought to rein in the siren of Lebensraum im Westen und im Osten and shackle the Wehrmacht aka Bundeswehr safely within the FRD’s own post 1945 borders has produced a nightmare – especially for those great geo-political thinkers, the Énarques playwrights. Some achieve hegemony, some have hegemony thrust upon them – une hégémonie allemande malgré eux-mêmes. Mario Draghi and the ECB Board have shot both their LTRO barrels and are fresh out of cartouches to reload. So it’s a German morality play now. Who knows which director will call the shots – Die Haus Frau Kanzlerin, Herr Schäuble, Herr Weidmann, Herr Wetserwelle, the Bundestag, the Pied Piper of Hamelin oder der Herr am Frankfurter Autobus? My hair-shirt is hairier than your hair-shirt. Let’s see what the Greeks do. (They’ll blame the Germans for all their troubles for sure. Debtors/profligates always wind up hating their thrifty creditors).

Well my guess is the Greeks are going to wake up one fine Athens morning in the unfullness of time and find to their shock-horror that they can’t make payroll. The banks will stay closed that fine morning because the truck with the Euros from the central bank isn’t coming today on account the CB doesn’t have any real Euros (the ones not printed in Greece) and the driver didn’t get paid on Friday. Le chat, la merde, les pigeons et le ventilateur seront trés intimes. So the Greeks will blame the Germans. Herr Schäuble will slap his lederhosen and call it a good day’s work. Europe will stagger to its knees. Final curtain. Epilogue. Seul une rêve effrayante.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100017061/europes-nuclear-brinkmanship-with-greece-is-a-lethal-game/

The horrible dilemma of EU/Euro is clearly laid bare by Ambrose. The Germans own the moral high ground. The Greeks own the wooden spoon, the pillory and debtors’ prison. They have much company. Unfortunately the hard and brutal reality is that the Germans and their hair shirt acolytes are dead wrong. They are pouring fuel on a fire which will blaze fiercely. The Euro is in its death throes and the Club Med soft under-belly will pay a terrible price in human misery.

It is not a prospect that anyone should see as salutary.

Simon

PS Sorry about all the links. Don’t feel obligated to read them all!