Nature abhors a vacuum. I don’t think Germany set out to take control of Europe via the EU, but signs are pretty clear the Germans are the only adults in the room.
All of the EU countries sell bonds that are denominated in Euros, but are the debts of the individual countries – the mortal wound to the EU. The 10 year bond is the benchmark – since they are all in Euros, differences in the rate are almost entirely the perceived risk of default.
The implied inteest rate for Greek debt is over 25%. A 1000 Euro Greek bond is selling for 284.3 Euros – less than the 50 or 60% “haircut” banks have been told is their “voluntary” contribution. Should it not be “voluntary”, folks who sold Credit Default Swaps against Greek Debt will have to “make good” the entire face value of the bond.
Italy went over the cliff today. The Italian bond zoomed up 49 basis points in a day (or lost 3% of the value in one day. Despite the magnificant victory in Libya, the government of Italy dissolved without as much as a whimper.
Spain is only a few days behind and France is starting its slide
Meanwhile, German debt dropped to 1.72%, 29 basis points less than the 2.01% for the brand new US Treasury notes auctioned yesterday.
Germany holds the future of Europe in its hands, whether they wanted it or not.
He he. There really is an irony in this, somewhere.
Oh well, we still have Penn State football to watch. We are — boom! boom! — Penn State!
(Oops. Did I say “boom boom?” Sorry.)
if at first you don’t succeed, try try again…
Well things certainly worked out well the last time that Germany tried to take over Europe.
WWIII anyone?
England made the decision to not drop the Pound Sterling and join the EU – which looks like a good choice. They have exposure to the debt of Europe (and may at some point decide building a tunnel to France was a mistake), but for now they seem to be mostly on the sidelines.
The IMF told the G20 to go pound sand a few days ago, which was surprising. Sarkozey and Obama seem like they may have issues now, especially with the audio leaked of them talking to each other about Israel.
You’ve been reading my stuff for a long time, so I’m sure you remember my antenna going up with Germany warming up its strategic relationship with Russia. Don’t lose sight of the fact that half of Germany used to be under Russia’s control.
I’m so cynical at this point, I wonder if the United States ever ceased being a colony of the United Kingdom, and they just let us pretend we are autonomous but control us through the internation banking system.
For a little fun, research the bio of Angela Merkel. She is from West Germany but her father accepted a pastorate in East Germany where the family moved. They were on quite cozy terms with the communist regime. Angela was a leader in the Hitler Youth (oops, I mean, Free German Youth) and was in charge of AgitProp (Agitation & Propaganda).
Perestroika, Comrades!
Nobody has said so yet, but I believe we are presently in WW-III … in a couple of ways.
This morning, the European Central Bank stepped in and started buying up French and Spanish debt to stuff in the vault with all their Greek debt.