Home > Europe, Politics > PIIGS: Shadow Boxing with Ireland

PIIGS: Shadow Boxing with Ireland


Bailouts

Ireland is all setup to take a bailout from the IMF in return for their sovereignty. Portugal is nearly ready to do the same. Why now? Why Ireland? It’s because they want to round up the low-hanging and shocking fruit.

Previously, I mentioned how they were downgrading all but Italy, and why. Now they reckon it’s time to bring home the bacon – and not a moment too soon. The IMF and the Eurobank are running a ponzi scheme and they are about to run out of capital, so they need more capital. Spain is the only stable provider of free capital other than Deutsche Bank in the EU, and Deutsche Bank is starting to talk about things like “rules” and “collateral” and “can you pay this back” – the IMF doesn’t want to hear about that.

Spain is on the verge of economic collapse at the moment. Their only industry that makes money – since “green jobs” flopped and took a huge portion of their market with it – are their banks. However, their banks are mainly supported by outstanding liabilities, which after all the fluff are no more than promises. Well, they have a lot of promises coming due from the Greek bailout and they haven’t collected much of anything. How are they going to keep this scheme afloat?

They do it just like Bernie Madhoff – they get more people into the game. In this case: Ireland. Ireland needs EUD 200bn and Spain needs to lend 178bn. That’s just right! However, they need more than that since all of Greece is going to come due by the end of Q2 2011. Therefore, they will also bailout Portugal. After that (end of 2011; early 2012), they are screwed. There will be nobody else that will take a bailout. They don’t want to bailout Italy because they know that corruption is a time-honored tradition in Italy and they don’t have the raw know-how to outfox the Italians on the corruption front.

The Kicker:

This isn’t really about bailouts. Every time they offer one they demand cuts to welfare and pensions (austerity) and the Unions freak out and riot (like in France and this is expected to happen in Ireland too). The riots are just a distraction  related to the cuts. If they just did the cuts, then a bailout would be unnecessary. If they heavily deregulated (which goes hand-in-hand with cuts) then they would have an economic boom.

The real issue is that these countries are losing their sovereignty.

My big prediction for Q4 2011:
The EuroBank and Spain will declare insolvency after Greece defaults (destroying the EUR). Germany will split off from the EU and go back to the Deutsche Mark. The EU will shatter except for the few countries that were solely living off of the teat of Germany, France and UK. France will say “merci” and will also drop out of the EU. The UK will stay in for a short while because they like paperwork and they also like making painful things last longer (if you don’t believe me, walk along the Thames from Black Friars Bridge to the Tower of London and count how many times you go up stairs only to go down stairs – or how often you slope down only to slope up. They could make it level, but they don’t).

This will aid in devaluing the USD further. The markets in the US will become comparable to the markets in Asia now. China will tank once the US finally admits that we can’t afford to have them make us stuff anymore and there is no more innovation pouring in there. They’ll still catch up to where we are now, but more slowly since the influx of new capital to pay for it won’t exist anymore. The US informal economy (notably the Black Market) will grow A LOT. The US right now is facing a really big problem regarding North Korea. I’m not sure if South Korea is ready to whoop Kim’s ass by themselves or not. I hope they are, because we can’t afford to do much to help them.

I have no guesses as to what will happen beyond that at this time… maybe civil war in one or more major countries, maybe a reversal of stupid regulative controls. The former would be really, really bad; the latter would spur a new economic boom for the whole world.

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Categories: Europe, Politics
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