Britannia Radio

11 November 2011 9:40 AM

The euro rampage won't stop at Rome: 'Spain is more at risk than Italy'

Italy and its debt disaster are pretty spectacular, so attention has been drawn away from the disaster that is Spain. Give it a few more days. The bond markets are going to take another look at the figures coming out of Madrid and widen their eurozone field of fire. (Yesterday Spanish spreads on ten year bonds were already at 4.2 percent.)

So far, the only reason Spain has not had to follow Greece, Portugal and Ireland into handing over control of its finance ministry to Brussels-appointed eurocrats is because its level of public sector net debt, relative to GDP, is still below that of Germany and the euro area average. (Meanwhile by the end of this year, Italy will have the second highest level of public sector net debt, relative to GDP, in the eurozone.)

However, according to a report out yesterday from the economist Jamie Dannhauser at Lombard Street Research, Spain, relative to Italy, faces a much bigger task in reducing its fiscal deficit and placing the debt stock on a declining path: 'Whereas the Italian budget should be in balance this year before interest payments are taking in account, the Spanish look like running a so-called "primary" deficit equal to around six percent of GDP. Official projections that it could get down to four and a half percent of GDP look wildly optimistic with Spain almost certainly back in recession.'

But here's what really sets Spain apart from Italy, and shows how dangerous Spanish investments now are: the vast scale of borrowing that took place within the privatesector before the crisis and the consequent asset price boom.

And that's not just the Spanish property market bubble.

According to Dannhauser's report, 'Spain's corporate borrowing binge makes Japan's in the early 1990s look fairly tame. Its ration of household debt to disposable income, although below Ireland's and the UK's, is similar to that in the US.'

'The ratio is only 50 percent in Italy, compared with 130 percent in Spain.'

'The loss of income from the financial crisis and the persistently lower rate of growth in the

future suggest the fundamental, or equilibrium, value of Spanish assets has been reduced significantly -- but the debt, largely provided by domestic banks, remains fixed in euro terms.'

But don't start thinking, 'this is private debt, not sovereign debt, it's not the same danger.' Wrong. The debt wonks among you may remember that it was Ireland's banks and the guarantee its (panicked, witless) government gave to bank debt in 2008 that drove Ireland into its disaster.

So remember this if you are looking for comfort in the fact that so much of Spain's debt is private, not sovereign: the Spanish government ultimately stands behind its banking system. So, 'potential losses on the latter's assets are therefore a massive contingent liability of the state.'

'It is the downward spiral between private debt, fiscal consolidation, low growth and banking solvency that really threatens countries in the periphery. Spain is more at risk than Italy.'

The euro: not so much a currency, more a plague.

And let that be a lesson to the new Greek government

EU completes negotiations with Berlusconi government:

PS: when I posted this yesterday, I didn't include a caption because I reckoned the 1945 picture was so well-known it didn't need explaining. However, I've learned that some readers don't recognise the shot. That is Mussolini second from the left, and next to him his mistress, Claretta Petacci, still looking pretty good although upside down and dead.

Now the euro-elite move to gag national opposition parties

First question out of the press pack after last night's meeting of eurozone finance ministers was about the EU interference in national politics -- the way the euro-elite are insisting, for example, that the new Greek government must be a government of national unity: surely that degree of interference is out of order?

Not at all, came back the answer. According to both Jean-Claude Juncker, prime minister of

Luxembourg (that's him pictured) and head of the eurogroup, and Olli Rehn, the European Commissioner in charge of the bail-outs, it is not at least out of order.

According to Rehn, all the eurozone member states in the 'programmes' -- that is, taking the bail-outs and submitting to control by EU/ECB/IMF bureaucrats, and those are Ireland, Portugal and Greece so far (stand by for the big one, Italy) -- have governments of national unity.

Which was a bit of a press-pack stunner for a moment, until a journalist said the obvious, which was: 'No they don't. For a start, Ireland does not have a government of national unity.'

Note of explanation for American readers: a government of national unity is one in which the opposition officially joins the majority party or parties to form a grand coalition, thereby guaranteeing a parliamentary majority.

It is what the euro-elite are forcing on Greece -- not that the euro-elite have asked the Greek voters, who cares what they think? Shut-up, Stavros, and do what you're told -- more, Juncker and Rehn insisted last night that the new government of national unity, the moment it is formed, must sign a letter promising to accept the entire rescue (some rescue) deal agreed last month at the summit, otherwise no money will be paid over, not even the amounts already agreed under the earlier, second bailout.

But this wasn't forced on Ireland or Portugal. So what were Juncker and Rehn on about?

This: they insist before any EU/ECB/IMF money is paid, they must have assurances that there is 'national unity' on accepting bail-out conditions -- which is to say, accepting EU-control of the national budgets -- before any money will be paid. Rehn insisted that the Irish opposition agreed to support the bail-out, so that was 'national unity' -- and they would not have paid over the money if they had not had such agreement from the Opposition.

Some unity: achieved by threat and blackmail.

The reason for this, of course, is that a real opposition would have the duty -- indeed, the desire -- to criticise the so-called bail-outs and all the damage the things are doing to the Irish, the Portuguese and the Greek people. Any opposition with a brain could offer other programmes, other ways of getting out of the debt hole into which the euro has pushed these nations (and will keep these nations for the next ten years).

These other programmes might not -- almost certainly would not -- include handing control of national fiscal policy, national economics, industrial policy, national assets sales and all the rest of the powers of a once-sovereign state over to the unelected euro-elite. Other programmes would not include, as in Greece, cutting public service pay by 20 to 30 percent while slamming up taxes to the same degree at the same moment: that is just the butchery of the little people in pursuit of ideology.

So the opposition parties are threatened or frighten into agreeing to back the Brussels deal: we will not oppose, we will cooperate, we will collaborate, we will stay silent, we will submit.

And then the people of these nations will be left with no leaders other than the governments put in place by the euro-elite, will be told by both sides of their parliament to believe that there is only the one way, only the one programme, all to support the one country called Europe...and you may recognise what is happening now across the eurozone:

'The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking -- not needing to think. Orthodoxy is unconciousness.'

It stinks: EU to install puppet governments in Athens and Rome

As feared, the EU and its collaborators have pulled off a coup in Athens. Now what can only be called the occupying powers are preparing to install their own man as the new Greek prime minister.

You doubt it? Just look at the two names that have 'emerged' to lead the new government: Lucas Papademos, who was until last year the vice-president of the European Central Bank, and Stavros Dimas, a former European Commissioner.

Over in Rome, where the EU is manoeuvring to bring down Berlusconi, the name 'emerging' to be the next prime minister is Mario Monti. Monti is not only a former European Commissioner, but he is also the author of a report commissioned by José Manuel Barroso on the future of the single market --which was a report meant to plan ways the powers of Brussels could be further extended into every part of the member states economic and fiscal lives, including taking control of corporation tax rates.

More, Monti is a member of the Spinelli set, a euro-fanatic group set up by members of the European Parliament and Brussels heavies such as Jacques Delors to press the construction of a final, centralised government in a country called Europe.

It all stinks.

Euzozone pressure squeezes out some truth at last. Lots more to come.

As we sing on the country and western circuit, 'Pressure makes diamonds.'

This

week's pressure in the eurozone has produced some gems:

First, Silvio Berlusconi has finally said out loud what every rational observer has known for years: that Italy has got worse since the introduction of the single currency -- 'Italians have been impoverished since the introduction of the euro.'

Second, the leaders of both Germany and France have had to admit out loud more of the obvious, that is, that it is possible some countries may leave the euro.

Of course, the entire euro-elite hasn't quite got there yet. Mario Draghi, the new head of the ECB, was asked at a news conference on Thursday about the chances of a country leaving the euro. All he would say was: 'It is not in the treaties.'

Yes, well, it's not, but then neither are bailouts or the ECB interfering in the fiscal policy of eurozone member states, but that's been no barrier to either. So it is Jesuitical (satisfyingly Jesuitical, I must say, because I enjoy seeing the anti-nation-state types in the EU actually living up to national stereotypes) of Mr Draghi to reply by simply saying 'It is not in the treaties.' Its not, but that doesn't mean it can't happen.

Perhaps one other reason Mr Draghi won't give a straight answer is that he is Italian, and one of the eurozone member states that may be forced out of the euro is...Italy. Which would mean Mr Draghi would be out of his fat-cat job before his term is up in 2019.

Third, the pressure on the Greek government to cancel its democratic referendum is yet more proof -- if it were still needed -- that what Brussels most abhors is giving the people any chance to resist the plans the euro-elite have for centralising economic and fiscal (and soon, legal, but that is for another post) power in the EU institutions, and stripping them from the national parliaments, over which voters still have (occasional) control.

The EU: how it destroys morals as well as countries

We know that both Nicholas Sarkozy and Klaus Regling, head of the eurozone's Luxembourg-based bail-out fund, have been kowtowing to the Chinese, begging them to hand over billions to the latest eurozone bail-out attempt. For the moment, it won't happen. The Chinese say they will not give any money until this latest spasm in the eurozone debt crisis clears and some kind of stability is restored. (That'll be a wait, then.)

But the shame of the euro-grovelling to the one-party Chinese communist state remains -- and has intensified today, as news of the latest Tibetan suicide by self-immolation reaches the Western news agencies.

AFP reports that Qiu Xiang, a 35-year-old Tibetan Buddhist nun died today after setting herself on fire in southwest China. This was the 11th such incident involving Tibetan monks and nuns.

According to the International Campaign for Tibet, her death was a call for religious freedom and the return of the Dalai Lama, the spiritual leader of Tibet who has been exiled and vilified by the Chinese communist government since 1959.

In recent months eleven, eleven, Buddhist monks and nuns have found the courage to douse themselves in petrol and set themselves alight: self-destruction is the only weapon they have. Meanwhile, the EU elite ignore these deaths and go on grovelling to the Chinese who have driven the Tibetans to this.

Yet once attitudes to such courage were much different in Europe. In 1969, Jan Palach, a young Czech student, went to Wenceslas Square in Prague, poured petrol over himself and set himself alight. It was a protest at the Soviet communist invasion of his country that had suppressed the attempts by the Czech government to bring freedom to their country, and a cry to his fellow Czechs to resist.

Palach's death rocked the Western World. Below is a picture of a cross marking the spot where he carried out his self-immolation.

Through the years of communist suppression, Palach's name was never forgotten.

One could trace the 1989 Velvet Revolution which finally freed Czechoslovakia from communist rule back to that day when Palach found the sort of courage the rest of us will never find: because we, most of us, are not like Palach, we are not heroes.

But let us not be Quislings, either. What the eurozone is doing, when it seeks to collaborate with China in return for money, is showing how morals across the European continent have degenerated since 1969. When Tibetans plead for freedom from communist oppression, just as Palach once did, now the so-called leaders of Europe look the other way and pretend they don't see what is happening in China.

You probably know this line ascribed to the Emperor Vespasian: 'Pecunia non olet.' Money has no smell. It has come to mean that money itself is not tainted by its origins.

But I say it is. And I say the moment the Chinese touch the euro, it will smell of the burning flesh of heroes.