Tuesday, 24 July 2012

A knock on your door from Barosso can mean only one thing...

It's getting rather tiring talking about the same topics, week in week out.
But they simply cannot be ignored.
As soon as they disappear from newspapers, they are simply simmering under the surface of a fast-track primordial swamp waiting to evolve and re-emerge a more fearful beast.
More than £30billion of value of British companies was obliterated  by news that Spain, as predicted, will likely need a national, as well as the already agreed, banking bail out. And if the Eurozone's fourth largest economy is sucked into the mire, well, I've said it before and will say it again. The EU is screwed.
In fact the Global economy is going to be up the creek without a paddle. World stock markets fell by 2% in the wake of the news.
British banks with billions tied up in Spanish loans are now in a precarious position while the credit ratings of the Netherlands, Luxembourg and Germany are all set for a downgrade, which ultimately will compound the problem, making the powerhouse economies of the single currency face higher rates of borrowing.
Italy is also heading towards a bail out with public debt totalling almost £1trillion.Ten Italian cities are on the verge of bankruptcy.
Currently Spain has been granted a bail out of up to £80 billion to shore up its banks, which are sitting on £122 of dodgy loans. But the latest news that the state also need an urgent cash injection adds an eyewatering £250billion onto that amount. Throw Italy into the mix and in total the Eurozone looks like it may need the previously predicted €2 trillion to get through to the end of the year. The bail out fund that took months to agree has only €700billion to it's name.
Let's see what that looks like as a number...

Meanwhile the Troika, (IMF, ECB and EU) are about to arrive in Greece to turn the knife a little more and make sure their hugely unpopular and unsuccessful austerity measures are being obeyed to the letter.
Greece is likely to suffer much deeper recession that previously thought, with expectations that the economy will shrink by 7% ratehr than the forecast 5% demonstrating the swingeing cuts are driving the economy into the ground. But without progress, Greece is being threatened with not receiving the final part of its bail out of €31.5billion. Reports suggest the IMF will now refuse any further calls for aid.
I was surprised to learn that despite his pontificating from Brussels, Commission President Jose Manuel Barosso hasn't even set foot in Greece, the country he has overseen being brought to its knees, since 2009.

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