The Pain in Spain
Wow that was fast.
MADRID (AP) — Euphoria over a lifeline of up to €100 billion ($125 billion) to rescue Spain's hurting banks morphed into a financial markets rout in a matter of hours Monday, as investors digested the still-undefined plan and became concerned the country may be unable to repay the new loans.
Nils Pratley at the Guardian is impressed. "Bailouts in the eurozone used to generate relief rallies that lasted at least a week. The Spanish version couldn't even manage a full morning."
The yield on 10-year Spanish government debt, which had fallen to 6% soon after the start of trading, ended the day at 6.5% – an astonishing turnaround. Worse, Italian bonds followed the same pattern, closing a whisker above 6%, the highest since January. Far from calming nerves, the grant of €100bn (£81bn) or so of cheap loans for Spanish banks seems only to have hardened investors' analysis that the eurozone debt crisis is getting worse.
The Spanish weakness only seemed to underline the weakness of other countries in the Eurozone as the bulls-eye moved directly to Italy. "Investors also zeroed in on Italy, sending its bond yields sharply higher amid worries it could be next in line for a bailout because of a deepening recession and increasing pressure on the administration of Premier Mario Monti."
And Spain's economy is in terrible shape with no sign of improvement anytime soon. ... Spain's bond yield is worrisome because it is perilously close the 7 percent rate that is considered unsustainable, and the level that pushed Greece, Ireland and Portugal to ask for bailouts of their government finances. While Spain's bailout does not include the government, investors are worried that Spain might eventually be forced into such a situation.
In the case of the Eurozone, to suspect something is to find that it is true. Now the only question is how long until the next step, the next failure, the next bailout, the next failure? In the video below Nigel Farage finds that even Red Ken Livingstone now agrees with him. Godzilla's footsteps are now audible outside London. Livingstone says what everyone knew all along. The Euro was nothing but a set of handcuffs designed to bind countries to a "United States of Europe" project which Livingstone claims was meant 'end war' -- and probably to end racism, stop climate change, foster gender equality, promote gay rights and all that good stuff as well. But handcuffs they were and they are pulling the countries towards disaster.
The bitter truth is that the European collapse is simply the consequence of Leftist fantasy politics. It is what happens when people realize that the 'paradise' they've been building is nothing but a deconstructed, demographically collapsing, hollowed-out and bankrupt shell of lies.
Still, nothing focuses a man's man like the prospect of being hanged on the morrow. If fear -- what is it but that? -- is now changing Ken Livingston's mind -- his intelligence finally burning through the veil of delusion in spite of everything -- then it is possible that as the crisis deepens even dyed in the wool liberals will begin to see the shackles around their legs for what they are.
What am I doing with these? Help! Help!
The only problem with the deathbed conversions of the sort that Ken Livingston is metaphorically experiencing is that it often happens at the stage when a crisis is cascading. It happens too late. The damage is widening exponentially. There won't be years or months left to change course. What Spain illustrates is the compression of time within a crisis. Things are not only happening, they are happening faster than anyone believed was possible.
And of course there is always the motive of opportunism. Suddenly outlets like the Independent are sounding like they were free-enterprise advocates all along. When the Big Government model starts to unravel the public will find that the most unlikely people will confess to secretly posing as commenters on the Belmont Club all along. Who knows, it might be even true.