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ECONOMICS – FINANCE – WORLD NEWS – GREEK DEBT

Spain is down on its knees, but not officially.

Today seems slow as everyone is still rolling around in the news that came out of China and the US yesterday. Essentially, it’s the same issues as always in the headlines: the push for eurobonds, Merkel’s stubbornness, downgrades and negative forecasts.What else is new?

Well, maybe this: Reuters brings us an exclusive saying that Spain will officially ask for an aid package as “early” as tomorrow. The ‘tomorrow’ bit being the actual news. Both in Madrid and Brussels officials deny ever having spoken of a bailout. A guessing-game that’s left to play is just how much money the EU will pump into Spain’s financial system. The IMF estimated €40bn to be necessary to recapitalize all the banks, Fitch, which just downgraded Spain to BBB with negative outlook, says it would rather be €60-100bn. So there’s that. It also remains to be seen which fund the money would be coming from. The ESM, which will only be fully implemented by July, seems like the better option, because its rule framework is more flexible. But because of the implementation delay, the funding could come out of the EFSF, which requires unanimous consent before throwing money at someone. Hmm. Difficult.

Germany’s response was something along the lines of “Sure we’ll help, we’d never let a man down. But, y’know, we need you to beg first.” That’s kind of weird, because this ‘begging’ also includes agreeing to EU-imposed austerity measures. But because a Spanish bailout would only regard the banking system and not the whole country (sort of), the requirements attached to the agreement would be less harsh as well, yielding the term ‘bailout lite‘.

The most obscure thing in today’s news, however, is probably this: Jean-Claude Juncker, prime minister of Luxembourg and currently still head of the Eurogroup, said the following in an interview with the Times (or for anyone with a Times subscription, read here):

I have always believed that, in spite of occasional bitterness, the European Union without Britain is no longer the European Union. For strictly national reasons and not out of any continental romanticism, the United Kingdom will become a member of the eurozone.

Excuse me? Continental romanticism? Occasional bitterness? The Brits don’t even believe that they’re geographically part of Europe!

And then there was the catfight on Greek TV yesterday, ending up with the spokesperson of the extremist Golden Dawn party being arrested for attacking two members of parliament (one with water, one with fists). read article/watch video

As for some weekend reading:

– the Economist on the human cost of India’s slowing growth read article

– Adam Smith‘s thoughts on income inequality in the Boston Review read article

– Gillian Tett tackling existentialism in her most bizarrely titled article yet in today’s FT read article

– a pro-inflation infomercial from 1933 America watch video

– how well Iceland is doing post-2008-implosion that the UK and the Netherlands paid for (mostly) read article

– and finally, what we can learn from the breakup of the ruble-zone twenty years ago read article

Have a good weekend!

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4 Responses

  1. princess1960 says:

    thank you for the very intristing article..i will try make one comment simple ..not mathematical but logical… US -CHINE both are in deep crisis .CHINE was good because of the globalisme ..
    – INDIA too problem politic oligarcia..and this country is very
    deep in crisis …
    -SPAIN need help this is sur i think if ECB do (not IMF) will be very seruos problem for EUZ
    real-state spanish have to do one very good cordination (timi) sell 70% and keep up a small profit for the bank in the same time high intress for new businss to real state.
    -GREECE political system is dead ..in this way nothing will change ..is in or not in EUZ ..will be very very seruois problem for EUZ …(cultura ) is not 5000 year before but 2012.. when the evolution minde is progress .
    ICELAND is very small country who the people working from morning untill evening with very good desidere to help the country ..too ..money is not EU ..
    UK will be big mistake if go together with the same system monetary..EU.
    -USSR WAS COMINUNIST with out 10 point ”M. K MARX
    -1933 INFLATION was after waltergat scandal i have see this documentar one cannal ITALIA- BUT have artifical and real inflation i think is one term bankare to keep strong ”ruls ” for profit (for me is not so important)..we don’t speak about valute but papers..,
    Adam Smith was good anasystis but not good economist..(for me)
    about the rich people i have to say …this system(capitalisme) make one strom new rich generation with out instict economict but with ( eat me ) because i am smaller and not strong (you understand what i mean ) so this richness doesn’t have high cuality (not corruption) like 0,1%…. this is the diffrent from the street rich ..(sorry) ..
    but MAO CE DOUNGH HAVE ONE CYTAT
    how high you go …so much pain you feel when you go down ..
    i don’t know if i am correct ..BUT TRUE YES

  2. […] its bank refinancing – €250bn the EFSF isn’t set out for. So then it goes back to the legal issue that is the ESM, which is not actually active yet and has different voting requirements from the EFSF. Here […]

  3. Ayatollah Nometoques says:

    Yo Princess,
    Great economic advice you deliver. At least as good as your English. Yes we can see the advantages of the Chinese model: if in disagreement, accute lead intoxication -in the back of the head. And the single child policy also giving you a charming choice: sleep with an assassinated foetus. Lovely.

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