Wednesday, April 6, 2011

The Portuguese debacle - and other funnies

Well, well, well. Who could have foreseen that the Portuguese would seek a bailout from the European Union? Huge surprise…

The third euro-region country in desperate need of a rescue, and by no means the last one, is slightly different than the other two since Portugal actually has a manufacturing base and didn´t fix and trick with their numbers as much, so the Portuguese crisis is actually a more real one, and on the surface not as bad. Real in the sense that there we actually can see most of her problems. Oily scheming Greeks and fucked-by-the-banks Ireland tried to hide, and have still hidden away, most of their crap.
But Portugal is also different in another way; they are very dependent on the Spanish economy. The two Iberian countries are very intertwined not only geographically, but also financially. In fact much of the Portuguese dilemma can be traced back to problems in Spain, and since Spain hasn´t really crashed yet (just a matter of time) the worst problems for the debt stricken and politically volatile Portugal is yet to come.

Financial markets have long priced in the idea of a Portuguese bailout, so the downgrade in their ratings have been a prelude to this. And the whole story is familiar isn’t it? Remember how the Greeks and Irish handled the same situation? Noooo…we can handle it ourselves. we don´t need a bailout. We can handle it And then woops; oh actually we need money, please give us some…

Portugal is aiming for a package that may be worth as much as 75 billion euros (probably more in the end). That is another huge loan, albeit with pretty good, for their situation, rates. And again, and this cannot be said or stressed enough, ordinary citizen will take the hardest hits. Remember how they fooled you into believing that borrowing and printing trillions to hand over to the already rich and wealthy was a great idea? How great it was to save the “too big to fail’s”? Well, now you´re gonna pay again, both for the austerity measures and the new loans taken.

Having fun yet?

At the same time the ECB is forecast to raise its benchmark rate by a quarter point to 1.25 percent, to counter the inflationary pressures they themselves have created. Again forcing ordinary folk to pick up the bill! This is of course not only very shady but also too little too late. Such an increase together with future rate raises will not help the in-debt countries, and our benevolent leaders´ favorite fake info-number, GDP, will not benefit either.

So what is next? Of course markets will temporarily be “calmed” by this bailout, and of course banksters, tricksters and soul-suckers in suits will claim, once again, that they´ve handled the crisis and that things will soon pick up.

Does anyone really buy that anymore? I mean, even you idiots out there should smell the rottenness by now.

Next up is probably Spain, although I wouldn´t count out Belgium or Italy either. And another crisis(‘s) emerging in any number of Eastern European states is also very likely to occur.

Spain for example has an unemployment rate in excess of 20 percent and a housing market dominated by variable-rate mortgages. Mortgages that are taken on the premise of higher returns of, what actually is; useless multi-billion housing- and real-estate projects. Instead entire cities stand empty and over a million homes are impossible to sell along the Spanish south cost alone. The Spanish banks are sitting on so much debt (guaranteed by the government) that this situation by itself is enough to plunge this EuroZone member into a new dark age. And were Greece, Ireland and Portugal are small fishes Spain is a giant wale which can, and should, tumble the entire Euro-project.

According to IMF numbers for 2009, the gross domestic product of Greece was $331 billion, Ireland was $221 billion, and Portugal was $233 billion, but Spain’s GDP in 2009 was $1.468 trillion. Roughly twice Greece, Ireland and Portugal combined.
If we go by Greek and Irish percentages, then roughly a third of the estimated €450 billion price tag to bail out Spain would be shouldered by the IMF—and here´s a fun fact; the U.S. puts up 20% of IMF money.

So the U.S. would be on the line for around €40 billion—to save Spain. Will the new U.S. Congress put up with that? Will the American regular Joe put up with that? Not very likely, and if so the IMF’s participation in a Spanish bail-out will be severely reduced, if not marginal. Therefore, bailing out Spain will be almost entirely a European affair.

Does Europe have €450 billion to bail out Spain? That is, does Germany have €450 billion to bail out Spain? And if we continue to play with numbers, will Germany and the IMF have another €400 to bail out Italy? Another €100 to bail out Belgium?

And even if that money can be conjured up, most likely via the printing press, nothing has changed. Does anyone really believe that Greece, Portugal, Italy and Spain all of a sudden will fix their problems just because they get hundreds of billions?

Our elected domestic frauds together with the non-elected tricksters of the European Parliament will of course stand by their assumption that the Euro is a good idea, even when the entire continent is drowning in despair, so there will be no political decision coming any time soon that would dampen the situation - in fact they will most likely try their very best to worsen it via, as mentioned, the printing press.

Again I feel obligated to draw your attention to what happened the last time we Europeans were in a mess like this. In actuality, the crisis of the 1930’s and the following World War of Pranks II, were a minor one compared to what awaits us now.

As I´ve said, argued, written and tried to explain for over ten years now we can look forward to many years of massive demonstrations, great upheaval, “terrorist”-acts, and governments changing more often than normal person changes underwear. And somewhere in this mess totalitarian ideas, religious nuts and hilarious tiny men with long pointy shadows offering hysterical simple solutions to a people in distress, will emerge and grow strong.

I don´t think you can imagine how bad this is going to get, but I can and I cannot stop laughing.

This is going to be the entertainment of a lifetime. I highly recommend vodka, popcorn and a comfy chair. The funnies are just getting started, stay tuned and make sure you don´t miss the real mayhem.

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