Eurotrash

September is here and after the relative lull of the summer holidays, shit is going down.

The central bank of Spain just released the net capital outflow numbers and they are disastrous. During the month of June alone $70.90 billion left the Spanish banks and in July it was worse at $92.88 billion which is 4.7% of total bank deposits in Spain. For the first seven months of the year the outflow adds up to $368.80 billion or 17.7% of the total bank deposits of Spain and the trajectory of the outflow is increasing dramatically. Reality is reality and Spain is experiencing a full-fledged run on its banks whether anyone in Europe wants to admit it or not.

Moments ago the French government suddenly announced the nationalization of troubled mortgage lender Credit Immobilier de France, which is also the country’s second lagrest mortgage specialist after an attempt to find a buyer for the company failed. “To allow the CIF group to respect its overall commitments, the state decided to respond favourably to its request to grant it a guarantee,” Finance Minister Pierre Moscovici said according to Reuters. What he really meant was that in order to avoid a bank run following the realization that the housing crisis has finally come home, his boss, socialist Hollande, has decided to renege on his core campaign promise, and bail out an “evil, evil” bank.

Euro-Zone youth unemployment has now ticked back up to its euro-era record-high of 22.6% (18-year highs). Only Portugal saw an improvement is the rate of unemployment among the Under-25 age group (from 37.6% to 36.4%) though it remains anarchically high. Italy was the hardest hit, back above 35% with its largest rise in youth joblessness in 5 months, Ireland rose back above 30% for its biggest rise in 11 months as France jumped to two-year highs and Spain and Greece are practically deadlocked with ~53% of their younger-generation out of work – new all-time records.

Spain’s national bank rescue fund said on Friday it will inject emergency liquidity into troubled lender Bankia immediately after the bank reported losses of over 4 billion euros ($5 billion) in the first half of 2012

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Bank funding crisis deepens

In other words European workers must now be forced to compete toe to toe with Chinese labor costs even though the cost of living in Europe is vastly higher than living in China. Of course the obvious solution to that conundrum is to make the cost of living here more like that of living in China. Which is a simple matter of doing away with workers rights, health care, education and any sort of pension at all. The outlines of a plan emerging here I think.

This is a BANK funding crisis, but it is nations of ordinary people who are being blamed and forced to pay for all the corruption, stupidity, greed and lies which caused it and are still causing it.

via Bank funding crisis deepens | Golem XIV – Thoughts.

The World Is Drowning in Debt, and Europe Laces On Concrete Boots

Three metaphors describe Europe: drowning in debt, circular firing squad and trying to fool the money gods with an inept game of 3-card monte.

The world’s major economies are drowning in debt–Europe, the U.S., Japan, China. We all know the U.S. has tried to save its drowning economy by bailing out the parasite which is dragging it to Davy Jones Locker–the banking/financial sector– and by borrowing and squandering $6 trillion in new Federal debt and buying toxic debt with $2 trillion whisked into existence on the Federal Reserve’s balance sheet.

It has failed, of course, and the economy is once again slipping beneath the waves while Ben Bernanke and the politico lackeys join in a Keynesian-monetary cargo-cult chant: Humba-humba, bunga-bunga. Their hubris doesn’t allow them to confess their magic has failed, and rather than let their power be wrenched away, they will let the flailing U.S. economy drown.

Europe has managed to top this hubris-drenched cargo-cult policy–no mean feat. First, it has indebted itself to a breathtaking degree, on every level: sovereign, corporate and private:

Germany, the mighty engine which is supposed to pull the $16 trillion drowning European economy out of the water, is as indebted as the flailing U.S.

Second, the euro’s handlers have already sunk staggering sums into hopelessly insolvent debtor nations, for example, Greece, which has 355 billion euros of outstanding sovereign debt and an economy with a GDP around 200 billion euros (though it’s contracting so rapidly nobody can even guess the actual size). According to BusinessWeek, the E.U. (European Union), the ECB (European Central Bank) and the IMF (International Monetary Fund) own about $127 billion of this debt.

Since the ECB is not allowed to “print money,” the amount of cash available to buy depreciating bonds is limited. The handlers now own over 35% of the official debt (recall that doesn’t include corporate or private debt), which they grandly refuse to accept is now worth less than the purchase price.

From Of Two Minds