From one ragged country to another. We are on a tour of Europe’s unraveling economies. Ireland…Spain…and now France.
Spain was in the news again yesterday. Its borrowing rate rose to 7.5%…a level that everyone says in “unsustainable.” We haven’t done the math ourselves, but we will take their word for it.
Policy makers in Madrid were rattled. Naturally, they took no responsibility for the mess. Instead, they blamed…short sellers! Yes, and banned short selling for 3 months.
That ought to do it, right? Everybody knows markets go down because people sell. So make selling illegal. Problem solved!
Now our travels have brought us back to France. At the heart of Europe…and at the heart of the alliance with Germany and the whole European Union project, if France can’t keep itself together…the whole EU is doomed.
And yet, France seems to be hanging by a thread too…while Francois Hollande reaches for a pair of scissors!
The debt levels which the country has are as unsustainable as Britain’s, yet its policies are more irresponsible and its remedies more restricted. Although it is considered a core country in the eurozone, France’s economic profile now bears more resemblance to Greece’s [than] Germany’s.
Public debt in France is at 86.1pc of GDP (146pc if ECB liabilities and bank guarantees are included). The projected budget deficit this year is 4.5pc, with France having exempted itself from the EU’s instruction to bring deficits down to 3pct by the end of the year.
These numbers are not unusual in the context of eurozone economies in general. What distinguishes France is the lack of political will to address them and, as a consequence, a projected debt to GDP ratio which would place it firmly amongst the PIIGS grouping…
France’s numbers are not so different from those of the US. But America has a very big bazooka….one that France does not have…at least not yet. The US can give out the word to its central banks to buy its own bonds. It can ‘monetize the debt’ in other words.
This is always a disastrous policy…but that doesn’t make it unpopular. And in a period of debt destruction, the disaster may be far in the future…and it may not be suffered by the people who cause it. But France doesn’t have that option. It has to operate in a more honest system…like the individual US states. Which means, it has to cut spending.
But Mr. Francois Hollande doesn’t seem particularly interested in addressing the situation in a reasonable way. The Telegraph describes his efforts so far:
Yesterday, a lunch companion explained how the French are reacting:
“France is finished. We’re leaving! Well, of course, I’m exaggerating. Young people with talent, brains and ambition are leaving. And old people with money are leaving. That leaves the middle classes…and what you call the ‘zombies.’ And there are more and more of them. France is becoming a divided place. But it’s not divided between those with money and those without…it’s divided between those who work and those who don’t. Those who do honest work have to work harder and harder to support those who don’t work.”
Meanwhile, from back in the USA, the Dow fell another 100 points yesterday. Why? Word got out that corporate earnings projections show the slowest growth in 4 years… This was reported as more evidence of approaching recession.
…and more evidence that the Fed needs to take action.
“Touch us. Heal us. Give us more QE,” said the multitudes. And the economists.
It is probably just a matter of time until the big bazooka fires off another blast…
Bill Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
“What distinguishes France is the lack of political will to address them”
oh harf. whether or not they have the will to address the problems is absolutely irrelevant. debt, increasing debt, exponential debt, crushing debt, terminal debt, is exactly how the system works, is designed to work, is intended to work. it’s a one-way street. the only escape is to ditch the entire system and start over from scratch.
THE FED HAS MONETIZED MUCH DEBT ALREADY
The New York Federal Reserve Bank has a page that shows its Bond holdings under “Open Market Operations”
Go to the New York Fed Page
Click Markets, then Open Market Operations then click System Open Market Operations and see the Fed holds $1.56 trillinn in notes and bonds.
then on that table choose T-Note and Bonds and see that the fed itself holds in some cases 60% of the amount issued under a Bond. (and that would be on top of what the Social Security fund holds). Implications?
“divided between those who work and those who don’t. Those who do honest work have to work harder and harder to support those who don’t work.”
you don’t say? isn’t that exactly precisely what everyone has been striving to achieve all these years? to be one of those who don’t work but are supported by those who do? isn’t that what infestment is all about? returns? interest? profits?
congratulations. you are all about to arrive at exactly the destination you sought.
LINK to FED Bond Holdings
In some cses they own OVER 60% of an issue. That is monetised debt. Printed money.
U.S. treasury can borrow at a low interest rate, from the Fed (i.e. from itself)…
MAN DOES NOT LIVE BY MUSCLE ALONE
Gman, physical work and also intellectual work have value yes. They earn the wages of labour.
Private corporations have buildings and factories and systems and many things that are also of great value in producing goods and services. Those who own these own capital. They receive the wages of capital.
It’s all good. In fact it is all VERY good. Things have never been better on this fine planet. What are you complaining about? Are you not getting your fair share? Why is that?
“Gman, physical work and also intellectual work have value yes. They earn the wages of labour.”
yes they do. but infestment is not work.
“Those who own these own capital. They receive the wages of capital.”
one may as easily say this of a manorlord. ownership is not work.
“What are you complaining about?”
pointing out the obvious is not complaining.
speaking of complaining … those who seek “returns”, those who seek to get from others more than they give to others, are on the path leading to the welfare bum, the banker, and the money printer. in terms of “more for less” these are the pinnacles of achievement – “something for nothing”. one should not be surprised that others besides oneself should aspire to so lofty a station, nor that it is not successful when more than the 1% try to live this way.
To invest is forego immediate consumption in return for being able to consume even more in the future.
Meanwhile others can consume today what the investor foregoes today.
Money can be spent today or invested for tomorrow. Your choice.
“… supranational sovereignty of an intellectual elite and world bankers ” (explained in 3:53 minutes):
youtube: The Shocking TRUTH of the Pending European Union Collapse!
(what, no moat?)
It’s all connected:
UNESCO is part of it; “You must destroy the family so people will then look to the state for direction”.
youtube: UNESCO – It’s Evil Purpose and Philosophy
youtube: 67-The War on Parents ( and the UN handbook for teachers)
“…supranational sovereignty of an intellectual elite and world bankers”
Sovereignty for the Elite only, none for Ireland, Spain, Italy, Greece and the USA, etc., etc.
“We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years… ‘
“… But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national determination practiced in past centuries.”
– David Rockefeller, Bilderberg Meeting, June 1991 Baden, Germany
…and the Rothschilds stay quiet behind the curtain contolling the puppet strings
Soon these bankers will require that you bow in their presence
Soon these bankers will consider themselves and their offspring ‘royalty’
having, as far as I can tell, no experience whatsoever. This young woman wants to run for political office. I just do not see what she has to offer. The sad part is, she is serious.
The only way to invest is to save first. Then you can loan your savings to someone who needs to borrow capital to grow or you can buy an ownership interest in an existing company. I don’t know why you call it “infestment.” A place where there’s no savings or investment is called Haiti (mostly due to the confiscatory policies of their government). Gman, you should move there.
when smoking became outlawed in NYC parks & beaches. There were people who said, they think it was a good idea.I would respond to them, wait til they come after you. Well,……………THEIR HERE !
Saw a question the other day. It went something like this. Which would you rather your child not become… Drug Dealer, Banker, Pimp, Lawyer or Politician. Perhaps Economist and Zombie should be added Bill?
“Drug Dealer, Banker, Pimp, Lawyer or Politician. Perhaps Economist and Zombie should be added…”
They’re all crooks so I don’t see any problem…
“The only way to invest is to save first. Then you can loan your savings to someone who needs to borrow capital to grow or you can buy an ownership interest in an existing company. I don’t know why you call it “infestment.””
because what you describe, isn’t.
investment is when you have a stake in an outcome, and you pay what it costs to get there. the investor’s pinnacle is to look around and say “we built this, it’s ours, we live here”. infestment is when you dance around to the highest “returns” moment by moment – “oh look, this pays, oh wait, THIS pays MORE!” – and then to dance away the moment interest payments are secured. it’s the pursuit of returns regardless of source or process and the avoidance of costs at all costs. the infestor’s natural pinnacle is welfare bum or money-printing central banker.
Perhaps you all should read a book freely available all over the web, if you can take the interminable errors from the scan to text. It’s called The Coming Battle, and it could have been written last week, last month or last year… In fact it was written in 1899. The first two chapters are available in PDF -@
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