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Spengler

What does Sarkozy mean by the term “liar”?

November 8th, 2011 - 11:14 am

As for Syria, a former French colony, the latest round of government violence has killed a French-backed Arab League initiative, Foreign Minister Alain Juppe allowed this morning. Humanitarian organizations now estimate the death toll at 3,500. It seems certain to rise sharply, as the opposition has a reported 22,000 men under arms.

With Europe at risk of bankruptcy, it is understandable that the French would be too distracted to remember the urgent warnings and grandiose promises they made only a few months ago in regard to the “Arab Spring.” French banks gorged on Italian government bonds and now are at risk of bankruptcy if Italy goes the way of Greece. The Wall Street Journal reported today,

Some French banks also are paying more than they usually do: They have to pay an additional 0.45 percentage point to 0.70 percentage point a day for funding, Mr. Gollapudi said. By comparison, high-quality U.S. banks typically are funding at about 0.15 percentage point more than what they would pay for overnight debt. The highest-rated financial firms were able to borrow money for seven days using commercial paper at an average rate of 0.08 percentage point last week, according to data from the Federal Reserve.

0.7% might not seem like a lot, but the three major French banks–Credit Agricole, Societe Generale, and BNP–earn respectively 0.13%, 0.34%, and 0.45% on their assets. The increase in their funding costs, in short, exceeds their profit margin. That means the whole French banking system already is running at a loss.

The Europeans, in short, are going bankrupt (“Liar!”). The bailout mechanism that they have proposed for their weakest members is a transparent scam in which markets have no confidence (“Liar!”). Bailing out Italy, for that matter, is a fool’s errand, for by mid-century, three-fifths of Italians will be at retirement age, and the state will go bankrupt in any case. Better to put the country through bankruptcy now (“Liar! Liar!”). What passes for European diplomacy in the Middle East is a mishmash of hypocritical platitudes at the precipice of disaster (“Liar! Liar! Liar!”).

Europe’s political class are an infestation of fleas on a dead dog. Any mention of reality appears to them as an existential challenge, and will elicit the response: “Liar!”

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