The
EU’s Systemic Corruption Makes Solving the Crisis Impossible
http://albertpeia.com/useusystemiccorruption.htm
‘The single most
difficult aspect about analyzing market moves in Europe is the impact of the
political class on just about everything.
Worldwide,
politicians are not exactly famous for honesty. However, Europe is a very
special case… where just about everyone is lying on just about everything
involving the economy and banking system.
This notion is
illustrated wonderfully by Spain’s Prime Minister Rajoy, who was recently
embroiled in a scandal in which he and many of the politicians in his party
were receiving illegal payments for decades via a slush fund.
Rajoy himself
allegedly received roughly $34,000 per year… from 1997-2008. This doesn’t bode
well in any country, least of all one that has broken down to the point that
pharmacies are running out of medicine and over 50% of youth are unemployed.
Rajoy first denied
all of the allegations… then this morning stated that, “I repeat what I said
Saturday: everything that has been said about me and my colleagues in the party
is untrue, except for some things that have been published by some
media outlets.”
At this point,
why would anyone listen to what Rajoy had to say about anything?
Those investors who
can remember back to last May, before Europe was fixed (by another massive lie,
this one from Mario Draghi), Spain’s banking system was on the verge of
collapse. What’s striking is that as late as May 28, Rajoy continued to
maintain that Spain would not need a outside funding, stating, “there will be
no rescue of the Spanish banking sector.”
At this point,
Bankia had already requested its bailout and Spanish banks’ shares were in a
free-fall. Moreover, Spain itself was just days away from requesting outside
aid from the EU.
The timeline says it
all:
May 9th: Bankia requests €4.5 billion loan, Spanish
Government states that the bank is “solvent.”
May 21st: Spain meets Bankia’s request for loan and
takes a 45% stake in the bank thereby instigating a partial nationalization.
May 23rd: Bankia’s bailout needs grows to €11
billion/ Rajoy retorts to France’s Hollande, “Hollande does not know the
state of Spanish banks.”
May 24th: Bankia’s bailout needs grow to €15 billion
May 25th: Bankia’s bailout needs are now €19 billion
(2011 profits revised to €4 billion loss)… the Spanish Bailout Fund has just €5
billion in cash.
May 28th: Rajoy comments, “there will be no rescue
of the Spanish banking sector.”
Weekend of June 8-10th: Rajoy texts to his finance
minister: “Aguanta, we are the fourth European power. Spain is not Uganda…
If they want to force the rescue of Spain, they need to start getting ready
€500 billion and another €750 billion for Italy, which will have to be rescued
afterwards.”/ Spain informally asks for €100 billion bailout/ EU Finance
Ministers OK the bailout.
Sunday June 10th: Rajoy states that the bailout is a “victory”
before commenting, “This year is going to be a bad one: Growth is
going to be negative by 1.7 percent, and also unemployment is going to
increase.”
Thus, in just one month’s time, Spain implements the largest bank
nationalization in its history and requests €100 billion from the EU to
recapitalize its banks. And yet, throughout this time, Spanish politicians
maintain that Spain’s banking system is “solvent” or in great shape… right up
until they get the €100 billion at which point the truth comes out: “This
year is going to be a bad one.”
Also note that Rajoy sealed the deal and which he proclaimed a
“triumph” (along with the above statement about 2012 being a bad year)
before hopping a plane to watch Spain’s soccer team play Poland.
So… Spain’s economy is lead by a man who denies that its banks are
in trouble (despite one of the largest already being nationalized), then
demands €100 billion for a bailout, calls said bailout a “triumph” before
flying to watch a soccer match… all the while sitting on over €300,000 in
illegal payments that he received in the decade leading up to the crisis.
There can be absolutely no trust in a system like this, nor can
there be any transparency. The EU Crisis will not end until this sort of
corruption and fraud is cleared from both the political class and the
banking system (Spain itself recently admitted that several of its biggest
banks have negative value).
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