Let’s play a little game
Let’s pretend that Spain does indeed need to be rescued from itself.
Let’s pretend that Spain finds a black hole in it’s banking system of oh…€726 billion
Oddly enough that’s the size of the EFSF,the European Financial Stability Facility
73% of this promised amount is funded by four countries:-Germany, France, Italy and….SPAIN
That’s right,Italy and Spain itself, both illiquid apart from ECB interference in bond auctions, are on the hook for a combined €231 billion should the worst come to the worst.
So, essentially, the debt crisis will be solved by major EU states going further into debt.
These are the same countries, remember, who,have been forcing their own domestic banks to buy government bonds in order to keep borrowing costs artificially lower than they would be otherwise.
And where have these banks been getting the money to buy these government bonds from?
Why from the ECB’s LTRO(Long Term Refinancing Operations) program of course.Essentially,this is a scheme where the ECB creates a few hundred billion euro out of thin air and offers it to banks across Europe at 1% for three years, who then go and buy longer term government bonds at a higher percentage return.
The banks,then take these bonds, and using them as collateral, put them on deposit with the ECB in Frankfurt,allowing themeselves
to then use these fractional reserves to create up to maybe then times that amount of money, and go buy more government bonds.
The situation repeats itself ad infinum.
This insane viscous circle is compounded when we look at who else is contibuting to this hypothetical 760 billion
Surely it is must be some reputable financial powerhouse,the Fed,China perhaps??
Well have a look at the list below:-
Well it get’s worse.
Let’s get back to our hypothetical scenario and if Spain implodes to the tune of €726 billion, what % of GDP, have the above financial juggernauts committed to…….
And there we have it, the madness of the Euro.
Ireland, Portugal and Greece have all lost their sovereignty to the IMF and ECB
Spain ,or Italy or both could be next
If that is the case, according to the above,Estonia, Slovakia, Malta and Slovenia will be destroyed too,
and for what?… the cause of European unity.
Even Germany, under the EFSF, will be crushed under the weight of a €211 billion contribution,that’s €2,573 for every German man, woman and child.
Europe would resemble itself in 1945, destroyed by it’s own actions,reduced to rubble by the grandiose,imperialist madness of a failed meglomaniacal project.
The American cavalry would again be forced to ride to the rescue on their white steeds,Russia and China would eye the smouldering continent with knifes and forks at the ready, and talk would begin again,that Europe would need to unite, so that a disaster like this, of it’s own making, could never happen again
Fear not,it’s but a hypotheses.