Well, isn’t it nice not to have to talk about Greece anymore?
Unlike Greece I’m not about to learn all of the ins and outs of what will and will not need to be done to stave off a default, because as we saw in Greece, it won’t matter. They will not report that they papered it all over, Spain’s gold will be confiscated and the Spanish will pay for the privilege of been so fleeced and the financial world will continue to believe that these problems are solvable by the studious application of more money.
Onto the numbers. Spanish bond yields on 10 year debt rose over 6% yesterday, hardly surprising since last week Spanish bonds fell on the market and no one heard them scream. At the same time Italian debt was sold like it was on fire rising 0.23% to 5.685%. Spain has more than 709 billion Euros of sovereign debt that it cannot inflate away because of the Euro. But, the ECB does not want to bail them out.
Fine, don’t. Let them exit the Euro. But that will not happen.
As I said above, what will happen is the complete and utter destruction of Spanish wealth and a lost generation or two while the bankers who happily lent them the money knowing full well they could never pay it back…
… expect to be paid in full. Why shouldn’t they, they have always been in the past.
This has finally woken the market up to the idea that LTRO 1,2 and 3 did nothing to solve the problems of Spain and will not solve them. What will happen is that both the Euro and the U.S. Dollar will be further trashed through central bank swap lines that do not have to be reported as part of the monetary statistics and the payment will ultimately be made in the sovereign gold of Spain, ensuring that they be impoverished for the next 50 years or so.
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