Free Republic

Papering over the structural imbalances in the Eurozone with endless bailouts will not resolve the fundamental asymmetries. Beneath the permanent whatever it takes "rescue" by the European Central Bank (ECB) lie fundamental asymmetries that doom the euro, the joint currency that has been the centerpiece of European unity since its introduction in 1999. The key imbalance is between export powerhouse Germany, which generates huge trade surpluses, and its trading partners, which run large trade and budget deficits, particularly Portugal, Italy, Ireland, Greece and Spain. Those outside of Europe may be surprised to learn that Germany's exports are roughly equal to...

The G-20 summit off to a great start if you like fireworks, endless bickering, and finger-pointing. Otherwise these summits are totally useless. When asked by a Canadian journalist "Why should North Americans risk their assets to help Europe?" EC President José Barroso replied "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy." The Guardian has further details in Barroso blames eurozone crisis on US banks. The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of...

Yes, it is "unfortunate" that Spain's bailout plan was poorly planned, organized and executed. It is not unfortunate that some are still left who can do simple math and call out Europe's failed plans. Which brings us to the present, where we find that even Deutsche Bank has given up hope for interim solutions, having realized that the market will no longer accept transitory, feeble arrangements. Instead DB is now formally calling for a big bang resolution, one coming from the ECB. Here is the punchline: "ECB has room for manoeuvre, but needs political cover for a ‘big’ policy" or...

The eurozone is not equipped to bail out Spain, the country's prime minister Mariano Rajoy has admitted, as global traders continued to punish the nation's stocks and bonds. Mr Rajoy said it was "not possible to rescue Spain" but insisted his country did not need a Greek-style international bail-out anyway. "To talk about a bail-out for Spain at the moment makes no sense," he told reporters. "Spain is not going to be rescued; it's not possible to rescue Spain, there's no intention to, it's not necessary and therefore it's not going to be rescued." Despite his comments, the Madrid bourse...

While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is about to lose its gold in a perfectly legitimate fashion, following amendments to the country's constitution by unelected banker technocrats, who will make it legal for Greek creditors - read insolvent European banks - to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker...

"First massive protest against labour law reform," headlines Spanish daily La Vanguardia, following demonstrations on Sunday in 57 cities protesting against labour law reform introduced by the government of conservative Prime Minister Mariano Rajoy. Tens of thousands of people marched to the call of the major national trade unions, UGT and CCOO. It was the "first step towards an attack that could lead to a general strike," notes the Barcelona daily paper, for which this possibility would be "a serious mistake". The government cannot and must not back down on this issue because it would endanger its credibility towards the...

With its political consensus, labour agreements and reforms in progress, Portugal appears to be better off than Greece. But the threat of bankruptcy remains and a fresh turn of the screw is still possible, warns Expresso. In Portugal, anyone who has watched the footage of pitched battles between demonstrators and police in Syntagma Square and heard the reports of political party disputes over the latest austerity package will have no trouble distinguishing between the respective situations of the two countries. In Portugal, we have a political consensus backed by 80% of MPs, and a social agreement [between political parties and...

Marc Faber Urges EU Dissolution, PIIGS to Default By jturbin | December 14, 2011 8:20 PM GMT “If I were Greece or Portugal or Spain, I would say ‘bye-bye.’ I exit the EU. And the debts in EU, that’s your problem.” The above commentary is from Marc Faber, author of the widely-read Gloom Boom & Doom Report. In a recent interview with Fox Business News, Faber argued that a dissolution of the European Union would be in the best interests for Europe in the long-run. “The best would be to dissolve the EU…let the markets sort this out. Let the...

Let us all extend our sympathies to the Spanish people. They face the greatest national emergency since the Civil War yet their vote for drastic change is palpably useless, even if democracy has in this case at least been respected. As union leader Javier Dos put it, the EU-imposed austerity plans of the incoming Partido Popular are “nothing more than the continuation of policies leading Europe toward disaster”. The new government of Mariano Rajoy has precious few policy levers at its disposal and cannot alone do anything at this late stage to prevent a death spiral within the strait-jacket of...

Spain's right stormed to a landslide election victory Sunday, an exit poll said, as voters toppled yet another eurozone government engulfed in a deepening debt crisis. Bowed by a 21.5 percent jobless rate, a stalled economy and spending cuts, the 36 million-strong electorate ended the Socialists' seven-year rule with a shattering defeat, the exit poll showed. Opposition leader Mariano Rajoy's Popular Party took an absolute majority of between 181 and 185 seats in the 350-member Congress of Deputies, said projections based on an exit poll by public broadcaster RTVE. The ruling Socialist party PSOE won between 115 and 119 seats,...

The Irish and German governments became entangled in a spat on Thursday after details of the Irish budget were given to the German Bundestag, before being presented to the Irish parliament, the Dáil. The sensitive plans, including a two-percent increase in the top value added tax (VAT) and a €100 household tax, were sent by the German finance ministry—along with a letter of intent from the Irish Finance Minister—to the Bundestag budgetary committee. This provoked outrage in Ireland, and denials from Irish Prime Minister Enda Kenny that he had given the information to the Germans. Irish opposition parties said if...

If you expected Spain to be the next Euro nation to collapse from economic issues after Greece(as I did), you were wrong. Italy is crumbling now as I type this.

On Monday, U.S. stocks racked up their best month in 20 years in October. Greek Premier George Papandreou said he will put Greece's bailout deal through a referendum, potentially undoing a long-awaited agreement struck just last week and sending European stocks down 4.4 percent. The region's bank shares fell 7.9 percent to $16.25. Greek opposition parties said the referendum was putting Greece's European Union membership at risk and instead called for a snap election. U.S. bank shares were expected to follow European lenders lower. The Financial Select Sector SPDR fell 4 percent with Bank of America down 5.9 percent and...

Assorted pundits chronicling Europe’s debt crisis bemoan that insufficient federal authority undermines systemic solutions to the fiscal pressures arising from the continent’s Mediterranean underbelly. Those enamored with state cures for any conceivable ill believe an overriding central authority should force dissimilar nations to act in unison. The proffered salve for festering sovereign debt sores is increasingly concentrated power. This sounds strikingly similar to the incessant prattle emitted across America’s airwaves: partisanship and political paralysis thwart Washington’s ability to act. Washington needs more control. Always more. Treasury Secretary Tim Geithner waxes, “You have this terribly damaging political dysfunction here and in...

A conspiratorially minded observer would be hard pressed not to conclude that the European financial crisis is a German plot. Southern Europe, indebted beyond its means and facing impoverishment as the bond-trading vultures detect easy prey, is now looking to Germany as its savior. The financial mess has completed Germany's redemption from pariah to the leader of Europe. … The capstone to Germany's reemergence came in the Bundestag vote on Thursday approving a massive increase in the European Stability Fund to €440 billion. A few parliamentarians protested the bailout, but most docilely approved it. … … It would be no...

Looks like no more official trips for G-Pap anywhere very soon: ECB'S WEIDMANN-IT IS WRONG TO ABANDON ALL PRINCIPLES OF MONETARY POLICY BY CITING A GENERAL EMERGENCY-SPIEGEL GERMAN CSU HEAD - IF GREECE CAN'T OR WON'T KEEP TRACK WITH RESCUE PLAN THAN AN EXIT FROM THE EURO ZONE IS CONCEIVABLE-SPIEGEL More from Reuters: European Central Bank Governing Council member Jens Weidmann told Germany's Spiegel magazine in an interview he considered it wrong to "throw out all established principles of monetary policy by citing a general emergency." In a preview of an interview to be published in the new edition of...

Europe's leaders have finally run out of time. If they fail to agree on some form of debt pooling and shared fiscal destiny at Thursday's emergency summit, they risk a full-fledged run on South Europe's bond markets and a disorderly collapse of monetary union. "We are heading towards fiscal union or break-up," said David Bloom, currency chief at HSBC. "Talk is no longer enough as the fire threatens to leap over the firebreak into Spain and Italy. "What the market is worried about is Germany's long-term committment to the euro project. If we see unreserved and absolute backing from the...

In recent weeks, Italy has come under the spotlight. In part it's because with Greece bailed out, attention naturally turns to: who's next? It can't be Ireland or Portugal, because they're already bailed out. Spain's issues are well known. So: it's Italy. All the major ratings agencies have been discussing its sovereign rating, as well as its banks, owing to the fact that it's economy is lackluster and its government is a mess. Today its services PMI missed big, showing contraction. And though most European indices are going nowhere today, Milan is off over 7%. Its short-term yields are widening...

Once again Europe's debt crisis has metastasized, and once again the financial authorities face systemic contagion unless they take immediate and dramatic action. If the ECB's Jean-Claude Trichet is right in claiming that Europe was on the brink of a 1930s financial cataclysm a year ago - and I think he is - it is hard see how the threat is any less serious right now. Fall-out from Greece flattened Portugal and Ireland last week. It is engulfing Spain and Italy, countries with €6.3 trillion of public and private debt between them. Yields on Italian 10-year bonds hit a post-EMU...

Moody's on Tuesday cut Portugal's credit standing to junk in the first such move by a ratings agency and warned the country may well need a second round of rescue funds before it can return to capital markets. Moody's Investors Service slashed Portugal's credit rating by four levels to Ba2, making it follow Greece into junk territory below investment grade. It cited heightened concerns that Portugal will not be able to fully achieve the deficit reduction and debt stabilization targets set out in its loan agreement with the European Union and International Monetary Fund. There also is an increasing probability...