Sadly, it would appear that all benefits of the doubt will be given to European leaders, as most of you are too cowardly to bet against them over the two day weekend.
What you expect to occur over this lapse of time eludes me. If there is a recurring theme here, it’s European leadership is a vacuum, and they aren’t very expedient about anything.
It took them a year and a half to create a largely unfunded entity to market as a bail out for Greece. It took them another three months or so from there to get the initiative to write off some of Greece’s debt.
Spain’s a lot bigger than Greece, meaning it’s an even more delicate subject. Forgive me, but I have a feeling that Spain requesting a bailout is going to touch a nerve with citizens of Germany.
This same group of leadership, which is even more disparate and unpopular now, is going to save the day over a weekend, yes? A good chunk of these clowns weren’t even elected by their countries. They have no mandate to govern. Look at Greece; any “progress” could be swiped away with the rise of the political left.
Germany is going to put itself on the line, and open themselves up to immense liability, just to see these people take the easy path and drop their responsibilities? The preponderance of Europeans have been taking the easy path for the last thirty years. Even now, they’re just begging for a sucker to drop their failings onto.
Germany’s not biting that bullet, people. Fuck “the greater good”. “Good” for whom?
Spain’s bailout will take months to craft. The debates will be contentious. The fights, bitter. And the terms will be brutal. Merkel will see to that. Spain will have the option to put up for collateral (read: transfer ownership) of their entire national reserves of gold, in exchange from modest funding. Likely the amount of gold demanded will be worth at par to the size of the loan.
And in doing so, Germany will guarantee that any repercussions witnessed from this little charade goes right where it belongs – the homelands of the culprits.
This is a most serious matter; outside funding drying up leaves Europe with few options. They are trying to triple their outstanding currency to stay solvent, without tripling their outstanding currency. That can’t be done. It’s idiotic to even suggest. Yet here we are.
But the German’s aren’t dumb. They understand what’s at stake. They aren’t going to compromise on this. And Spain will not appreciate being told to surrender the only hard assets they have that could be used to offset the effects of price increases and collapsing confidence at home. These countries are betting the house knowing full well they have their gold reserves to fall back on, if they ruin everything. Even if no one wishes to acknowledge it.
What Germany is demanding is that Spain’s leadership put their contingency policy on the line. This is Spain’s game to lose. Germany may regret loss of the trade advantages the euro has provided, if this gambit fails. But they would then have possession of the second most liquid form of money, next to the US dollar.
Believe me. This will be an especially acrimonious phase of the European Debt Crisis. We are now moving out of the “Numbers/Confidence Game” and into the “Wealth Game”.
Paper promises and assurances on the part of indebted countries are meaningless. It’s time for the PIIGS to start putting up their national treasures as collateral. And they are going to hate it.
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DITTO
Indeed. Great post. As ugly as it is – this is what I believe to be fact and ultimately what will happen.
I would like to see the terms of any final deal with Spain. As well as the collateral that Germany determines necessary.