‘The results of the elections in France and
Greece have made it abundantly clear that there is a tremendous backlash
against the austerity approach that Germany has been pushing. All over
Over the past several years, German Chancellor Angela Merkel and French President Nicolas Sarkozy have made a formidable team. They worked together to push the eurozone on to the path of austerity, but now Sarkozy is out.
Francois Hollande, the new French president, has declared that the financial world is his "greatest enemy".
He may regret making that statement.
of the primary reasons why Hollande was elected was because he clearly rejected
the austerity approach favored by the Germans. Shortly after winning the
"Europe is watching us, austerity can no longer be the only option"
Hollande says that he wants to "renegotiate" the fiscal pact that European leaders agreed to under the leadership of Merkel and Sarkozy.
But Merkel says that is not going to happen. The following Merkel quotes are from a recent CNBC article....
are in the middle of a debate to which
instead of being on the same page,
But if the French do not get their debt under control, they could be facing a huge crisis of their own very quickly. The following is from a recent article by Ambrose Evans-Pritchard....
absolutely must cut public spending and control the debt,” said Marc Touati
from Global Equities in
is holding all of the cards, but much of the rest of the eurozone does not seem
afraid to defy
of the political parties in
New Democracy (the "conservatives") won about 19 percent of the vote, but they have already announced that they have failed to form a new government.
So now it will be up to the second place finishers, the Syriza party (the radical left coalition), to try to form a new government.
Alexis Tsipras, the leader of the Syriza party, is very anti-austerity. He made the following statement the other night....
But at this point, it seems very doubtful that Syriza will be able to form a new government either.
PASOK, the socialists that have been pushing through all of the recent austerity measures, only ended up with about 13 percent of the vote. In the 2009 election, PASOK got 44 percent of the vote. Obviously their support of the austerity measures cost them dearly.
So what happens if none of the parties are able to form a new government?
It means that new elections will be held.
analysts are saying that there is now a 50 to 75
percent chance that
the outcome of the Greek election shows that it will be very difficult to form
a viable coalition and to implement the measures required in the MoU.
Particularly, the identification of the 7% GDP of budget savings for 2013 and
2014 by the end of June looks very unlikely to us. As a consequence, in a first
step, the Troika is likely to delay the disbursement of the next tranche of the
programme. Note that for 2Q 2012, disbursements of €31.3bn from the bailout
programme are scheduled. If
There is no provision that allows for the other nations to kick them out.
As I wrote about recently, the Spanish economy is rapidly heading into an economic depression.
Now it has come out that the Spanish government is going to bail out a major Spanish bank. The following is from a recent Bloomberg article....
Rodrigo Rato stepped down as head of the Bankia group as a government bailout loomed after Spanish Prime Minister Mariano Rajoy retreated from a pledge to avoid using public money to save lenders.
a former International Monetary Fund managing director, proposed Jose Ignacio
Goirigolzarri, ex-president and chief operating officer of Banco Bilbao Vizcaya
Argentaria SA (BBVA), as Bankia executive chairman, he said in a statement
But this is just the beginning.
banks all over Europe are going to need to be bailed
out, and countries such as
Connolly, a persistent critic of Europe, estimates it would cost Germany, as
the main surplus-generating country in the euro area, about 7 percent of its
annual gross domestic product over several years to transfer sufficient funds
to bail out Europe’s debt-burdened countries, including
amount, he has argued, would far surpass the huge reparations bill foisted upon
fact, there have been persistent rumors that
A while back, German Chancellor Angela Merkel’s Christian Democratic Union party approved a resolution that would allow a nation to leave the euro without leaving the European Union.
believed that this resolution was aimed at countries like
The following is an excerpt from that resolution....
"Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily–according to the rules of the Lisbon Treaty for leaving the European Union–leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro."
analysts will tell you that they think that it is inconceivable that
But stranger things have happened.
That is correct. Any German bank, if it so chooses, will have the option to dump its EU sovereign bonds into the SoFFIN during a Crisis.
people have assumed that it will be a nation such as
And the "smart money" is definitely betting on something big happening.
Right now some of the largest hedge funds in the world are betting against the eurozone as a recent Daily Finance article described....
Some of the world's most prominent hedge fund managers are betting against the eurozone -- and not just the peripheral countries everyone knows are in trouble. They're taking positions against the core countries, economies that -- until now -- everyone has assumed were rock-solid.
Yes, the countdown to the break up of the euro has officially begun.
great financial crisis is going to erupt in
If you were frightened by what happened back in 2008, then you are going to be absolutely horrified by what is coming next.