Saturday, June 9, 2012

Spain gets a 100 bln euro bailout

Should be greeted positively by markets on Monday.

I am long EUR/USD. That should rally sharply.

11 comments:

Trixie said...

Cue the theme music to Hogan's Heroes:

http://www.zerohedge.com/news/here-they-come-ireland-demands-renegotiation-its-bailout-terms-match-spain

Tom Hickey said...

@ Trixie

Just as Warren predicted.

Trixie said...

What the hell is the end-game here though??? How much longer can this go on? Continue to cycle through Ireland, Greece, Portugal, Spain, Italy?

I'm done with it. My time is much better spent following Galbraith around the internet making sure he doesn't associate with MMT in any way.

Go ahead and think I'm kidding. Don't underestimate my stamina for absurd and petty distractions.

JKH said...

Tom,

"Just as Warren predicted"

Interesting, given that there seems to be some current uncertainty about the funding mechanism - from those who've agreed to it.

Where did he do this,and exactly what did he predict?

What did he know about what hasn't yet been decided? I'm keen to see it unfold.

Anonymous said...

Trixie, the best thing to happen would be for Ireland, Spain, Greece etc to leave the eurozone, default on their debt and adopted a new currency which would devalue.

It would not be pain free but that is the only way forward.

All other actions are just can kicking.

Damo

Matt Franko said...

Trixie,
" following Galbraith around the internet making sure he doesn't associate with MMT in any way. "

You've got that right!

JKH,

http://moslereconomics.com/2011/10/24/germany-the-10th-plague/

Looks like it eventually even goes back to Germany itself... Pharoh should have listened to Moses-ler... ;)

Resp,

Tom Hickey said...

@ JKH

As I understand it, Warren's predictions, scattered across many comments at his place, have been similar to that of Soros in his recent speech. Kicking the can down the road, especially selective bailouts as they become necessary does two things.

First, it prompts other countries on the periphery to demand their own share. Ireland is already restive.

Secondly, it sends a signal to currency traders that the game is still on. Since they understand the underlying weaknesses of the system, they pile on, testing each weal link as it emerges. Then another punt. Wash, rinse, repeat, until the point is reached at which the euromasters have to throw in the towel, admit defeat, and either take a step toward actual resolution that is believable, or else abandon the treaty.

That point is pretty much agreed upon as being Spain, since it is too big to bail. But even if it were, Italy is next on the list, and that is definitely too big after a bailout of Spain.

So there is a definite end-game here. It simply won't be possible to punt until recovery, which seems to be the plan, especially with the enormous level of private debt still in the EZ.

Couple that will a policy of expansionary fiscal austerity, and the outcome is inevitable disaster as debt-deflationary depression takes hold and their is social uprising and political revolt. This is a European Spring in the making.

This is scattered throughout many comments at Mosler's place.

DanF said...

I got in EUR/USD early this morning before the market. The PIP was large but I rode that to just after 3:00 pm est.

Nice. it will be interesting to watch when the European markets open later today.

Media Mentions said...

The Spanish bailout proposal seems to be its own beast: the usual pros and cons, but you clearly understand that. Although just before I stumbled onto a pretty neat article that seems to summarize the whole situation quite well (http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=IWR5HF1GMHD8&preview=article&linkid=288dc1ef-2339-41ae-842b-4867777c807d&pdaffid=ZVFwBG5jk4Kvl9OaBJc5%2bg%3d%3d). In any event, I’m curious to see where this whole thing goes. Fingers crossed for the EU.

Anonymous said...

MMTers have been predicting and recommending a break-up of the Euro for years now. They've been wrong.

Tom Hickey said...

Anonymous: "MMTers have been predicting and recommending a break-up of the Euro for years now. They've been wrong."

Oh? Looks to me like the prediction is right on track to be fulfilled, unless the eurocrats take some advice from "the MMT'ers" about how to fix the predictable mess they engineered and the useless punting they've engaged in since the crisis.