Why the euro zone seems more like the Twilight Zone

Je viens juste de finir d’écrite le commentaire pour le : Sortir de l'euro ou mourir à petit feu

Que le journaliste Michael Babad publie sur le Globle & Mail,  donne une définition assez particulière de la zone euro : «Euro zone and Twilight Zone»

Pourquoi je consacre du temps sur l'Europe ?

Premièrement, c'est un sujet intéressant, mais ici on a affaire à une corruption étatique dans toute sa splendeur, mais à un niveau mondial, où des groupes d'intérêts influents manipulent les politiciens comme des marionnettes pour satisfaire leurs appétits gargantuesques de profits.

Nos intervenants traditionnels :

·         Les pays émergents qui ont des trillions de réserves.

·         Les banques qui font des trillions de profits.

·         Les multinationales qui font des trillions de profits.

Le peuple dans tout cela, instrument nécessaire pour faire des trillions de profits, un peu d’humour fait du bien.

Secondo, ultimement certains pays, vont être obligé de restructurer leurs dettes, évidemment, ce qui va influencer les investisseurs, donc, les taux d’intérêt accordés aux pays souverains risquent d’être plus élevés.

Comme à peu près tous les pays industriels ont été irresponsables, on risque de trouver
la pilule salée.

Extrait de : Why the euro zone seems more like the Twilight Zone, Michael Babad, Globe and Mail, Mar. 28, 2011

Euro zone and Twilight Zone

The euro monetary union is sinking ever deeper into the muck.

Not only are observers downbeat on the EU summit that ended Friday, but German Chancellor Angela Merkel is suffering voter setbacks.

"For quite some time the markets had expected the EU summit at the end of last week to begin to tackle some of the issues with respect to the sovereign debt problems that have been causing problems in Europe for over a year now," CMC Markets analyst Michael Hewson said today.

"Given EU leaders' predisposition for kicking the can down the road over the past 12 months, the markets somewhat naively thought that this might be the beginning of the first small steps in tackling the problems, until Portugal’s government failed last week in trying to pass another austerity budget, and provoking another crisis," he said in a research note.

"With Portugal remaining in denial about its need for a bailout, the optimism that had been driving the single currency higher now looks hopelessly misplaced and weekend events in Germany could well cause further problems."

Last week, the EU summit signed off on a permanent bailout fund for the 17-member monetary union that will kick in in 2013. At the same time, Portugal inched ever closer to seeking a bailout amid a political void sparked by a parliamentary rejection of austerity measures.

Then, on the weekend, Ms. Merkel's coalition lost a key region in state elections, one it had held for half a century. She lost it to the Greens, which signals worries over her government's nuclear policy, but analysts said her European policy may have been a factor as well.

"Having lost two elections in a row in areas where there is normally strong support, there must be doubts about whether Merkel’s policy on Europe has the support of the German people and this could call into question Germany’s role as Europe’s cash machine with respect to the bailout fund and any future agreements," Mr. Hewson said.

Je comprends, le pauvre Allemand est écœuré d’acheter des dettes souveraines qui risques à toute fin d’être restructurées.

Carl Weinberg, the chief economist at High Frequency Economics, did a brutal weekend take on the situation in Europe, with an introduction similar to that of the old hit TV series Twilight Zone.

"No, you have not entered the Twilight Zone," Mr. Weinberg said. "Rod Serling is not on hand to end this insanity with a plausible, if somewhat sketchy, explanation of your plight. You are, instead, in Euroland, where the financial stability of the second-largest composite economy on the planet is sliding backwards - ever faster - down a steep hill. Prospects for escape become grimmer with every failed effort to regain traction."

The technical issues related to the permanent bailout fund, which would replace an existing plan, won't be completed until June, while the permanent fund is still years away.

"This is not a credible remedy for Portugal - which may need help as soon as this week - or Spain when its banks fail," he said.

Portugal, he noted, must redeem a €4.5-billion bond in mid-April and a €5-billion bond in mid-June, with only €4-billion in cash on hand. "Without a government ... default may be inevitable."

When you put it all together - soaring government borrowing costs in the periphery, Portugal's political void and Ms. Merkel's setbacks - it's hard to see a saving grace. And, said economist Martin Schwerdtfeger of Toronto-Dominion Bank, there's no real surprise that the markets are still pricing in "massive discounts" for Greek and Irish debt.

"The price of their debt suggests markets are still assigning those debt instruments a high probability of default," he said in a report today.

"Unfortunately, the expectations for a strong response to the debt crisis generated in advance to last week’s European Council gathering have only been addressed through half-way measures, and this will continue to weigh on the markets."

Les solutions proposées par Merkel & Sarkozy ont un problème fondamental, malheureusement le peuple n’est pas dans l’équation de la solution.