Monday, 11 June 2012

Unravelling already

Barely had the conference call ended that secured Spain a €100bn lifeline than the deal started to unravel. Imagine a waveform oscillating at first gently with low amplitude and frequency; the bail out sums are relatively modest, and the effects last for months. As time goes on the amplitude and frequency increase to the point where hundreds of billions are moving to secure effects that last for days only. This is the end phase, just before the waveform collapses in chaos. 

So far the game is playing out with just the financial sector and governments as actors; so far the big industrials and corporates have been pretty quiet. Whereas the UK has only 4 non-finance firms in the global top 100 (BP, Tesco, Vodafone ...) Germany has at least 8 (Volkswagon, Daimler, E.ON, Siemens, BASF, Deutche Telekom, BMW, Deutche Post ..) and many of these have been hoarding cash. I have a hunch that there's a point at which these will come into play - but not to save the banks.

It's all moving very rapidly now.


Barnacle Bill said...

Unfortunately it will be us the proles that will bear the brunt of the burden.
Lost employment, reduced services, worthless pensions, blighted futures for our grand children, etc ...
All for what?
So that our political Masters can keep themselves in the lifestyle we have allowed them to become accustomed too.

Oldrightie said...

BB's spot on. One possible hope for the future is the corporate need to sell their wares and the people to produce them. bring that back into localised operations rather than Global and we may see some sense arise in all this chaos of political mindlessness.

Anonymous said...

Oh God, the thing that I don't want but greatly desire is upon us.

Raewald, I imagine and visualise a seismograph, the crazy way the pen whizzs up and down during a major earthquake event.

Heaven help us all.

Edward Spalton said...

The situation takes most of the fun out being able to say "I told you so".

An Irish chap made much the same point on Radio 4 this morning. "Each bail-out is more expensive than the last and buys less time".

Some day they have to stop and find a new game.

In the meantime I have put more of the garden down to potatoes

Anonymous said...

Good on the least I'll have some [of your] potatoes to eat when tesco shuts down.
You'll need more than'll have no electric/gas/diesel/petrol etc....all need money to start the loop.
I think we had better start getting the troops back from abroad soon....and Mr Cameron and his mates had better check their life policies...I don't think they pay-out in case of civil unrest.
Just sayin'

Ian R Thorpe said...

I looked at the problem today. It seems the Spanish banks have been buying all the Spanish government's debt and the Spanish government have been lending them the money to buy it.

Which is more or less what Gordon Brown was doing here.

How do these people get promoted so far beyond their level of competence?

Dave_G said...

Don't be too cocky - I wouldn't put it past our "leaders" to declare that political and economic unity is the ONLY way to secure the future and for them to take us there without our consent.

Even if they rushed a referendum on the issue I reckon they could still con the electorate into agreeing.

We're f****d

Edward Spalton said...


I quite agree that people could be frightened into "getting the strength of Europe around us" with the slogan of "Three million jobs" depending on EU membership

As Tony Coughlan of the Irish National Platform said of an earlier Irish referendum, "It was the fear of the people, not the will of the people" which spoke.

With all three main party leaderships (plus the BBC, plus the CBI plus the main TUC leadership) lined up behind EU membership, I doubt whether an "Out" vote could be secured.

If push came to shove, I would fight to achieve it but expect the fight to be on the enemy's ground at a time of his choosing.

cascadian said...

Creating government bonds from thin air, which the banks can "buy" with the "money" thus created, and use as collateral to pretend they are "solvent".

Welcome to the ZimbabwEuro. Soon to be printed in trillion euro denominations.

Better buy that Spanish villa quick, while it is available for thousands, soon it will cost multiple trillions-wadda bargain, deal of the century.

Anonymous said...

"Better buy that Spanish villa quick, while it is available for thousands, soon it will cost multiple trillions-wadda bargain, deal of the century"

Except that people who have been buying them, have had them destroyed as they had been built without the requisite brown envelope (sorry, planning permission) they are left with the land.....

Political and fiscal union was ALWAYS the end-game of the euro...the various fiscal crises the road to amalgamation.

Cascadian said...

Better to hold a potentially dodgy villa than dodgy ZimbabwEuros.

I think you are going to see a big change in Spain, they will be welcoming any investor with open arms soon.