So now a Bloomberg Columnist is calling for Germany to exit the Euro Zone.
It’s nice not to be quite such a lonely voice.
*Here is the earliest link of my saying this that I could find.
Category: Europe
Too True
And Now It’s Spain
It looks like Spain is going to be getting a bailout for its banks:
Responding to increasingly urgent calls from across Europe and the United States, Spain on Saturday agreed to accept a bailout for its cash-starved banks as European finance ministers offered an aid package of up to $125 billion.
European leaders hope the promise of such a large package, made in an emergency conference call with Spain, will quell rising financial turmoil ahead of elections in Greece that they fear could further shake world markets.
The decision made Spain the fourth and largest European country to agree to accept emergency assistance as part of the continuing debt crisis. The aid offered by countries that use the euro was nearly three times the $46 billion in extra capital the International Monetary Fund said was the minimum that the wobbly Spanish banking sector needed to guard against a deepening of the country’s economic crisis.
On Sunday, Prime Minister Mariano Rajoy tried to deflect criticism for his government’s decision to seek assistance for Spain’s ailing bank. The winners, he said, were “the credibility of the European project, the future of the euro, the solidity of our financial system and the possibility that credit will flow again.”
What is interesting here is that this is a bailout for the banks, and not a bailout for the Spanish government.
What is even more interesting is that it appears that the bank bondholders will be at the back of the queue:
Investors holding bonds issued by Spain and its banks will probably rank behind official creditors in the queue for payment after the nation asked for a bailout of as much as 100 billion euros ($125 billion).
The funds will be channeled through the state-run FROB bank-rescue fund and Spain will “retain the full responsibility of the financial assistance and will sign” the agreement with the other partners, according to the statement issued June 9. The document did not make clear whether the European Stability Mechanism, the region’s permanent support fund, which is likely to start operating in July, or the temporary European Financial Stability Facility, will make the loan.
“This is state financing, and the risks of an equity injection into the banks will stay with Spain,” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc in London. “Spain needs a systematic restructuring of its banking system, which could entail haircuts to subordinated bank debt. Official lenders on the other hand are likely to demand seniority.”
Spanish Prime Minister Mariano Rajoy has been forced to abandon his attempt to recapitalize the nation’s banks without outside help as the country’s descent into recession obliged lenders to own up to spiraling losses. While Rajoy said yesterday the agreement was “the opening of a credit line,” rather than a bailout such as those received by Greece, Ireland and Portugal, and the conditions of the loan affected the financial industry, the sovereign is ultimately responsible.
Spain needs to insist on major haircuts for the bond holders. The banks are insolvent, and like the chicken said, they knew the job was dangerous when they took it.
Billions for the Banksters, But Not One Cent for the Citizens
The European Commission is recommending a massive bailout for the banks, but nothing to help the citizens:
The European Commission has proposed that money set aside for helping governments should be used to bail out ailing banks directly.
The commission also pushed for more integration through a euro-wide “banking union” and a single deposit protection scheme to protect savers.
“Flexibility and speed are of the essence,” its head Jose Manuel Barroso said.
The call comes as fears over the health of Spanish banks have shaken markets.
Bankia, Spain’s fourth largest bank, has asked for another 19bn euros recently from Madrid, which itself is struggling to get spending under control to meet its deficit targets.
“To sever the link between banks and the sovereigns, direct recapitalisation… might be envisaged,” the commission said.
The commission’s comments are part of its analysis of Europe’s response to the debt crisis. “The economic situation in the euro area deteriorated significantly over the last year,” the commission said.
But the answer real pain of ordinary people is for them to suck it up.
This is f%$#ed up.
Spain weighs Bankia debt issue – FT.com
Spain has nationalized the failing bank Bankia and it proposed recapitalizing it with Spanish government debt:
Spain is considering directly injecting its own government debt into BFA-Bankia to help fund the stricken lender’s €19bn nationalisation, in an attempt to sidestep borrowing money directly from the bond markets.
The plan, viewed as highly unorthodox by analysts, involves Madrid issuing Spanish government guaranteed debt to Bankia in return for equity, with the bank then able to deposit the bonds with European Central Bank as collateral for cash.
On Friday Bankia, Spain’s third-biggest lender by assets, announced that the state would invest €19bn in what will be the country’s largest ever bailout, with the government expected to control about 90 per cent of its shares.
This would have the effect of the ECB purchasing Spanish debt, which the ECB (the German Bundesbank) is opposed to.
It would be a win win for everyone, but since there is no pain for the ordinary Spaniard involved, the European Central Bank has rejected the deal:
A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said.
News of the rejection came as Spain faces elevated borrowing costs in the bond markets, tries to persuade investors it can contain problems in a banking sector weighed down by €180bn of bad property loans and, on Tuesday, saw its central bank governor stand down early.
Madrid had floated the unorthodox idea over the weekend of recapitalising Bankia by injecting €19bn of sovereign bonds into its parent company, which could then be swapped for cash at the ECB’s three-month refinancing window, avoiding the need to raise the money on bond markets.
The ECB told Madrid that a proper capital injection was needed for Bankia and its plans were in danger of breaching an EU ban on “monetary financing,” or central bank funding of governments, according to two European officials.
At this point, the best action for the Spanish government is to allow the bank to default on its bonds (not its deposits), where I am certain that German bank exposure is high.
The Spanish should not make the same mistake as the Irish. Do not make the bondholders whole.
If you do, you are simply taxing your citizens to fund foreign investors bets.
There is no obligation, either legally or morally, to do so.
H/t Eschaton
The EU Bureaucracy Isn’t Completely Stupid
The EU’s financial services regulator is proposing allowing for a binding shareholder vote on executive compensation:
Shareholders in Europe’s listed companies will be given a binding vote on pay while those who invest in banks will gain powers to set a cap on bonus levels, under plans being drawn up by senior EU officials.
The initiative from Michel Barnier, the EU’s top financial services regulator, would hand bank investors the voting power to curb “morally indefensible” pay and limit the gap between the lowest and highest paid. Banks would also be forced to disclose their top 20-30 earners.
The French commissioner outlined his plans in an interview with the Financial Times in which he laid out his response to pay rebellions that have rattled executives at Barclays , Citigroup and AstraZeneca .
“I like that expression – the shareholder spring – or even a regulation spring, a rule-making spring,” he said. “I’m very attentive to this movement which I see as very positive. It corresponds with what I’ve been doing for the last two years. We need to put responsibility and transparency everywhere.”
Your mouth to God’s ear, Mr. Barnier.
How the ECB Will Destroy the Euro Zone
It’s now beginning to look like Greece will end up leaving Euro Zone.
The problem is that the EU is a consensus body, so Greece would have to agree to leave.
The solution is therefore to create conditions that are so onerous that Greece will have to leave.
The problem is that the only way that they can really do this is by crashing their banking system so that the only alternative is to leave the currency union.
The problem is that everyone knows this, and so we are seeing a slow-motion bank run in Greece, and we’re likely to see one in the rest of the peripheral nations:
Clever, huh? The only hitch is that, now that the game plan is becoming clear, rational Greeks are not choosing to wait for an EZ attack before withdrawing their funds from Greek banks and transferring them somewhere, anywhere, else. There is a gradually accelerating bank run taking place which is likely to reach criticality before a Greek-EZ policy showdown can take place.
There is a broader lesson here. By threatening to choke the Greek banking system, the EZ implicitly threatens to do the same for Spain or even Italy. They can say otherwise, but why should depositors in shaky peripheral banks believe them? Withholding euros from peripheral banking systems is a gun that goes off before it is fired. Simply brandishing this weapon is causing havoc and speeding the demise of the entire zone.
Better to put the gun away and do what should have been done all along: have the ECB assume the lender of last resort function for all EZ banks, with centralized financing of deposit insurance in particular. Don’t use the threat of a financial panic as a policy tool.
Greece should never have been a part of the Euro Zone, and considering the fact that they have more in common with the 3rd (corruption, dynastic politics, tax evasion, huge underground economy, etc.) world than they do with Western Europe, it’s arguable that they should never have been brought into the EU.
But most of the problems here, and what will cause the collapse of the Euro if it is not corrected, is that the basic system is fundamentally flawed.
It is pro-cyclical, it seems to be structured primarily for the financial industry, and it has no mechanism to address imbalances between member states.
If they continue on this path, it won’t just end the Euro Zone, it could cause a breakup of the EU.
Greeks to Hold New Elections
Roll Stewart!
They couldn’t form a coalition, so there will be a caretaker government followed by a new election. It appears that the left leaning SYRIZA party rejected the proposal for a “government of technocrats”.
What a surprise, the group they are saying here is to allow the EU (the Germans, really) to take over the country and democracy be damned.
Jon Stewart nails it when he notes that nearly 70 years after the end of WWII, the Germans rule Europe.
Lamest Political Party in the History
Professor Pongoo
Pole to poll: Professor Pongoo won more votes than the Liberal Democrats in a council election in Edinburgh. Photograph: Ali Tibbitt/ STV
While there are significantly less viable parties out there, Canada’s Rhineroceros Party, and the Monster Raving Looney Party in the UK, but because they fancy themselves as being in the big leagues in Britain, the Liberal-Democrats win the prize:
If there was a symbol of the Liberal Democrats’ discomfiture as their vote plummeted across Scotland and the rest of the UK, it came in the shape of a penguin.
In the Pentland Hills ward for Edinburgh city council, the Lib Dem candidate won fewer votes than Professor Pongoo, or independent candidate Mike Ferrigan, who ran his campaign in a full penguin suit.
Professor Pongoo, who stood to raise awareness of social and environmental issues, took 5.6% of first-preference votes to the Lib Dems’ 4.7%.
On the brighter side ……… Ummmm ……… There is no brighter side. You were outpolled by a bloke in a f%$#ing penguin suit!
About the only thing more embarrassing would be to be out-polled by the Fabian Socialists.
MoD Goes Back To Jump Jet
About a year ago, the British decided to switch from the STOVL F-35B to the catapult and arrestor hook F-35C.
They were building two carriers, but they would only equip one with the necessary equipment to launch and land the aircraft, leaving the remaining carrier as the world’s most expensive helicopter carrier.
Well, they are back to the B model: (Paid subscription required)
In the depths of the crisis about 18 months ago surrounding the Stovl model, the U.K. walked away from the F-35B, saying it would instead buy the F-35C and denigrating the jump-jet version as an inferior aircraft. But since the F-35B gained the Pentagon’s blessing as having its Stovl-unique questions resolved, London is now embracing the variant it abandoned, in part citing the development progress. “The Stovl aircraft has made significant progress since the SDSR was published over 18 months ago,” the Defense Ministry says.
The back-and-forth is not just about semantics. The U.K. decision during the 2010 Strategic Defense and Security Review to opt for the F-35C added weight to those hoping to cancel the F-35B, irking U.S. Marine Corps officials who were eager to see the version survive.
U.K. Defense Secretary Philip Hammond, in announcing the move to Parliament, still defends the 2010 ruling. He says the decision on carriers “was right at the time, but the facts have changed and therefore so, too, must our approach. This government will not blindly pursue projects and ignore cost growth and delays.”
The U.K. expects to take delivery of its first Lockheed MartinF-35B Joint Strike Fighter in July. Credit: Lockheed Martin
In the end, it was cost that brought the U.K. back to the F-35B. The price to fit HMS Prince of Wales—the second Queen Elizabeth-class carrier—with catapult launch and arrestor gear doubled to £2 billion ($3.2 billion) since the initial estimates were made going into the 2010 review , Hammond asserts. Moreover, U.K. planners were increasingly concerned about higher manpower costs associated with operating such an aircraft carrier. The decision is a setback for General Atomics, which hoped to sell its electromagnetic aircraft launch system (EMALS) to the U.K.
Hammond also says the conversion would have delayed the restoration of the U.K.’s carrier strike capability by three years to 2023. The current plans call for HMS Queen Elizabeth to begin sea trials in 2017, with aircraft to fly from the deck in 2018 in preparation for an operational capability around 2020.
Understand that the Brit carriers are gas turbine powered, and so could not be retrofitted with steam catapults, and EMALS is still showing problems, and the cost is increasing.
Also, the MoD was committed to building both ships (the cancellation clauses are pricey) but only had money to convert to CTOL, which meant that when it was in retrofit, they would have no carrier capabilities.
It is yet another testament to David Cameron’s “genius” at governance:
For the government, the about-face on JSF is domestically embarrassing. While vowing to fix the lax acquisition practices that it blamed on the Labour administration, it is now reversing course on the first major item in its procurement agenda.
Yeah, like that competence is fairly oozing from the Tories. (Not)
Quote of the Day
H/t Brad Delong.
Buh Bye Sarko (and Greece)
In what has been forecast in the polls for weeks (months?) Francois Holland defeated president “Bling Bling”:
Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy today to become France’s next president, heralding a change in how Europe tackles its debt crisis and how France flexes its military and diplomatic muscle around the world.
Exuberant, diverse crowds filled the Place de la Bastille, the iconic plaza of the French Revolution, to fete Hollande’s victory, waving French, European and labor union flags and climbing its central column. Leftists are overjoyed to have one of their own in power for the first time since Socialist Francois Mitterrand was president from 1981 to 1995.
“Austerity can no longer be inevitable!” Hollande declared in his victory speech Sunday night after a surprising campaign that saw him transform from an unremarkable, mild figure to an increasingly statesmanlike one.
It helps to be standing next Nicolas Sarkozy. Standing next to him, I would look “increasingly statesmanlike.”
I think that the money quote is toward the end:
People of all ages and different ethnicities celebrated Hollande’s victory at the Bastille. Ghylaine Lambrecht, 60, who celebrated the 1981 victory of Mitterrand at the Bastille, was among them.
“I’m so happy. We had to put up with Sarko for 10 years,” she said referring to Sarkozy’s time as interior and finance minister and five years as president. “In the last few years the rich have been getting richer. Now long live France, an open democratic France.”
I think that Sarkozy showed everyone who he really was when he decided pander to bigots when it looked like he was losing.
It’s also a referendum on Angela Merkel, who, in a real breach of the political norms, openly endorsed Sarko in the election.
That being said (I really use that phrase too much, don’t I), if the French rejected the idea of Merkel as ally, the Greeks pretty much firebombed the Reichstag:
Alexis Tsipras became the surprise package of the Greek election by telling Angela Merkel to get lost.
“The people of Europe can no longer be reconciled with the bailouts of barbarism,” Tsipras, 37, said on state-run NET TV late yesterday after his Syriza party unexpectedly came second in the country’s election. “European leaders, and especially Ms. Merkel, should realize that her policies have undergone a crushing defeat.”
Tsipras’s calls to tax the rich, delay debt repayments and cut defense spending struck a chord with voters angry at austerity measures imposed by the European Union and the International Monetary Fund in return for bailouts. As far as euro membership is concerned, Tsipras told voters that a Greek exit would put the currency itself in jeopardy and they shouldn’t feel “blackmailed” into more austerity.
The result put Syriza ahead of the Socialist Pasok party, potentially derailing efforts to implement the terms of the country’s financial lifeline. Syriza, which means Coalition of the Radical Left, won 16 percent of the vote, projections showed. That exceeded the 13 percent won by Pasok, one of the two pillars of the political establishment since 1974. New Democracy, led by Antonis Samaras, topped the poll with 20 percent.
The result, the best since the party was founded in 2004, puts Tsipras in a position to try and form a government should New Democracy fail to put a coalition together in the first round of talks.
BTW, New Democracy has already given up on forming a government, because together they can’t get anyone but the Socialists (Pasok) to agree to continuing austerity. (Merkel and the EE demanded that both leading parties agree to the terms in order to get the loans, with the predictable result that both together got about ⅓ of the vote.)
It’s pretty complex, because, in order to make a coalition without New Democracy and Pasok, almost all the other parties have to join the coalition, and somehow I don’t think that the Leftist Tsipras, the Communists, and the Neo-Nazi in everything but name Golden Dawn will find common ground.
Nicolas “Petain” Sarkozy
So, Nicolas Sarkozy is going thoroughly right wing and anti-Muslim:
Nicolas Sarkozy has stepped up his appeal to France’s far-right by lauding national identity, borders and French Christian heritage at a vast open-air rally in the shadow of the Eiffel tower.
………
Sarkozy’s alternative May day Labour rally, which he initially said was a defiant celebration of “real” work versus the traditional trade union marches, had caused a political slanging match in France.
A Communist newspaper and various commentators likened the president to Marshal Pétain, the leader of France’s Nazi collaborationist Vichy regime in the 1940s, for trying to appropriate the “values of work” for the right. His party slammed the parallels as shameful and disgusting.
(emphasis mine)
You have to understand: The French Republics (all of them) have had a tradition of militantly secular, as in, “If you get married in a church, it doesn’t count, do it again at the town hall.”
He doesn’t get why National Front Leader Marine Le Pen got so many votes. While part of it is the fact that she puts a softer and more sophisticated edge on the right wing xenophobic message, the rest is because both Sarkozy and Hollande were perceived as being too EU friendly, and in particular, they are not fond of German hegemony in the EU.
Sorkozy does not get it: He won’t get their votes in sufficient quality because he is Merkel’s toady, and Merkel’s frantic attempts to bolster his reelection efforts just makes it more obvious.
Yeah, Austerity Works
The UK is officially back in recession:
When David Cameron became PM, and announced his austerity plans — buying completely into both the confidence fairy and the invisible bond vigilantes — many were the hosannas, from both sides of the Atlantic. Pundits here urged Obama to “do a Cameron”; Cameron and Osborne were the toast of Very Serious People everywhere.
Now Britain is officially in double-dip recession, and has achieved the remarkable feat of doing worse this time around than it did in the 1930s.
Britain is also unique in having chosen the Big Wrong freely, facing neither pressure from bond markets nor conditions imposed by Berlin and Frankfurt.
Yep, the UK is now doing officially doing worse than it did in the great depression.
Why is anyone still listening to the austerity monkeys?
Sarko Comes in 2nd
This is the first time since the 1950s that a sitting president of France has not gotten the most votes in the 1st round of elections since the founding of the 5th Republic:
French President Nicolas Sarkozy is wooing far-right voters after losing narrowly to his Socialist rival in the presidential election’s first round.
Francois Hollande came top with 28.6% and Mr Sarkozy got 27.1% – the first time a sitting president has lost in the first round.
Third-place Marine Le Pen took the largest share of the vote her far-right National Front has ever won, with 18%.
Referring to her voters, Mr Sarkozy said: “I have heard you.”
“There was this crisis vote that doubled from one election to another – an answer must be given to this crisis vote,” he said.
So, “President Bling-Bling” is going to go right-wing populist racist in the hopes of getting nearly all of Marine Le Pen’s National Front knuckle draggers, because the neither the Left Front and the Democratic Movement voters are receptive to a xenophobic message.
I don’t think that it’s going to work, because Sarkozy is clearly Angela Merkel’s toady in European politics, and the defacto German hegemony in the Euro Zone is something that French populists of both the left and right cannot abide.
About all Sarkozy has going for him is that he’s more stylish than the rather colorless Hollande, but it will be a long shot for him on the May 6 runoff.
Sarkosy knows this, which is why he is trying to up the number of debates between the two finalsts to 3 from the usual 1.
Austerity Isn’t Working for Qnyone
The 2nd most obnoxious people in Europe in their support of the magical austerity fairy are the Dutch, and now their coalition government has collapsed over their own austerity plans:
More uncertainty loomed for the euro zone on Saturday after the prime minister of the Netherlands, Mark Rutte, said he expected new elections to take place following the collapse of talks on new austerity measures.
The announcement is unwelcome news for Europe’s single currency zone, particularly because the Netherlands is one of just four countries using the euro currency that have maintained a coveted AAA credit rating.
………
The Dutch government has taken a tough line on bailouts for Greece and given strong support to Germany’s efforts to force through a new pact on fiscal responsibility in the euro zone.
But the country’s domestic politics have been plunged into crisis because targets for the budget deficit, laid down by the European Union, were missed.
On Saturday it became clear that a package of measures that had been under negotiation for several weeks, intended to save about 14 billion euros, or $18 billion, would not be supported by the Freedom Party, led by Geert Wilders, a populist right-wing and anti-Islam campaigner. The proposal included spending curbs and tax increases.
If 90% of politics is economics, then the right wing populist parties springing forth throughout Europe have a bright future, because, as much as it pains me, they are right on the economics of the situation.
Of course, the far left parties are largely correct on this too, but the mainstream parties are completely clueless.
Hell of a choice.
Rupert Needs to Be Banned from Broadcast Ownership Right Now
The latest news is that News Corp paid hackers to help people steal the broadcasts of its primary competitor:
Part of Rupert Murdoch’s News Corporation empire employed computer hacking to undermine the business of its chief TV rival in Britain, according to evidence due to be broadcast by BBC1’s Panorama programme on Monday .
The allegations stem from apparently incriminating emails the programme-makers have obtained, and on-screen descriptions for the first time from two of the people said to be involved, a German hacker and the operator of a pirate website secretly controlled by a Murdoch company.
The witnesses allege a software company NDS, owned by News Corp, cracked the smart card codes of rival company ONdigital. ONdigital, owned by the ITV companies Granada and Carlton, eventually went under amid a welter of counterfeiting by pirates, leaving the immensely lucrative pay-TV field clear for Sky.
The allegations, if proved, cast further doubt on whether News Corp meets the “fit and proper” test required to run a broadcaster in Britain. It emerged earlier this month that broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test.
No, News Corp is not “fit and proper” to broadcast in the UK.
Greece is Imploding
I’m serious. It looks like local scrip is breaking out all over the country as an alternative to the Euro:
In recent weeks, Theodoros Mavridis has bought fresh eggs, tsipourou (the local brandy: beware), fruit, olives, olive oil, jam, and soap. He has also had some legal advice, and enjoyed the services of an accountant to help fill in his tax return.
None of it has cost him a euro, because he had previously done a spot of electrical work – repairing a TV, sorting out a dodgy light – for some of the 800-odd members of a fast-growing exchange network in the port town of Volos, midway between Athens and Thessaloniki.
In return for his expert labour, Mavridis received a number of Local Alternative Units (known as tems in Greek) in his online network account. In return for the eggs, olive oil, tax advice and the rest, he transferred tems into other people’s accounts.
“It’s an easier, more direct way of exchanging goods and services,” said Bernhardt Koppold, a German-born homeopathist and acupuncturist in Volos who is an active member of the network. “It’s also a way of showing practical solidarity – of building relationships.”
Basically, we are seeing a wholesale flight from the regular economy, and the concept of the Greek nation state. (It’s also a repudiation of the EU, since it sets up a system where it’s impossible to purchase non-local products)
The Guardian presents this positively, but I see it as a step toward Greece, a barely function nation to begin with, moving in the direction of Somalia.
I’m increasingly coming to believe that the Euro currency experiment, and in particular German domination of this process will lead to another war in Europe (hopefully cold, and not hot) in the next decade, as my brother (Bear who swims) has predicted, .
The Krauts Don’t Practice What They Preach
It looks like the Germans are going to miss their austerity goals this year:
European countries are expected to implement tough austerity measures amid the debt crisis. But Germany isn’t setting a very good example. SPIEGEL has learned that Berlin failed to reach its own austerity goals in 2011. And despite pressuring its neighbors to save, Germany is behind this year too.
As she travels from one European Union summit to the next, Angela Merkel’s constant mantra in recent months has been austerity, austerity, austerity. But apparently the German chancellor hasn’t been quite as strict when it comes to her own country’s budget.
SPIEGEL reports this week that the German government didn’t reach even half of its planned savings in the federal budget. Only 42 percent of the spending cuts named by Merkel’s coalition government, comprised of the conservative Christian Democrats and the business-friendly Free Democratic Party, were actually not implemented.
Calculations made by the influential Cologne Institute for Economic Research indicate that only €4.7 billion ($6.16 billion) of the €11.2 billion in austerity measures stipulated by the savings package actually took shape in 2011.
You know, maybe, just maybe, Merkel and allies are a bigger part of the problem than people imagine.
Someone Remembers the Old Lesson: Do Not Let German Chancellors Run Europe
To the accolades of his countrymen, Spanish Premier Mariano Rajoy has told Sarkosy and Merkel to go Cheney themselves:
The Spanish rebellion has begun, sooner and more dramatically than I expected.
As many readers will already have seen, Premier Mariano Rajoy has refused point blank to comply with the austerity demands of the European Commission and the European Council (hijacked by Merkozy).
Taking what he called a “sovereign decision”, he simply announced that he intends to ignore the EU deficit target of 4.4pc of GDP for this year, setting his own target of 5.8pc instead (down from 8.5pc in 2011).
In the twenty years or so that I have been following EU affairs closely, I cannot remember such a bold and open act of defiance by any state. Usually such matters are fudged. Countries stretch the line, but do not actually cross it.
…………
What is striking is the wave of support for Mr Rajoy from the Spanish commentariat.
This one from Pablo Sebastián left me speechless.
My loose translation:
“Spain isn’t any old country that will allow itself to be humiliated by the German Chancellor.”
“The behaviour of the European Commission towards Spain over recent days has been infamous and exceeds their treaty powers… these Eurocrats think they are the owners and masters of Spain.”
“Spain and other nations in the EU are sick and tired of Chancellor Merkel’s meddling and Germany’s usurpation – with the help of Sarkozy’s France and their pretended “executive presidency” that does not in fact exist in EU treaties.”
…………
The Latin Bloc is awakening.
The Germans don’t realize just how deeply disliked they are, and this has nothing to do with the unpleasantness from 70 years ago.
Politicians prime directive is to be reelected, and once they realize that calling Angela Merkel a c%$# sucker ensures electoral success, the pretty much everyone in Europe (except for Nicolas Sarkosy, who is desperately clinging to in what appears to be a vain attempt for politic survival) is going to start telling her to pound sand.