Union Europaea delenda est. This is one of the core positions on this blog. And as we watch the stresses building up within the EUnion as a result of the economic 'down-turn' it would seem the EUnion is firmly on it's way to oblivion. People more knowledgeable then I have said it was always going to be thus. But the collapse seems to be here, for real now. The question is: How much damage will be done, most importantly to us, mere citizens?
The deal struck by EUnion leaders last Thursday wasn't. It was immediately apparent when the first news broke. But over the last days more and more details have come out that illustrate the utter fatuousness, the complete emptiness of what was concocted by Frau Merkel and Napoleons retarded nephew.
The 'leveraging' consists of trying to lure outside investors by covering the first 20% loss on bonds that in all likelihood will incur 50-70% losses, at the least. That's and interesting and attractive opportunity isn't it? Invest in the EUnion and suffer losses of only 30-50 cents on the euro, instead of the full hit.
Hopes of BRIC involvement were dashed earlier, when Brazil bluntly said 'Thanks, but no thanks'. After the summit, Sarkozy shuttled off to China to ask pretty please for help. In a moment of complete insanity, the EFSF even suggested issuing bonds in Chinese Yuan. The Chinese, culturally inflicted with a higher form of politeness, did not refuse so bluntly. They just refused to commit. Which in Chinese terms is pretty much the same answer the Brazilians gave (minor update: See what I mean?).
The much ballyhoo-ed 50% haircut does NOT slash Greek debt in half, as the evidently completely illiterate reporters and anchors of the Dutch news wanted you to believe. That haircut is only for private sector investors. Since the majority of Greek debt paper is held by governments, Greek debt will be reduced by 28%, at most. And this is assuming that banks will fully commit, which they haven't yet and maybe never will. That was another teensy detail, like the participation of the BRICs, left open in the deal from last Thursday.
All in all the deal is an empty vessel of promises that will not be kept. The EUnion leaders have set themselves up for failure. The crisis will return in a few weeks. And as the stress increases, the call for the ECB to start the presses will mount as well. And when that happens we will all be Greeks, victims of corrupt politicians, undemocratic adherents to a non-viable ideology, that will not stop until all the economies of the EUnion are exhausted and lie in ruins before us.
That includes our own government, our parliamentary system, our MSM and the entire spectrum of 'social partners'.
Collectively, they are force-feeding us the message that it is good to lose our savings, if it means the EUnion will linger on for another few years. That pulling the plug on this misbegotten adventure will result in even more ruin. That's is what they said at the beginning of this crisis. That is what they are still saying now. But the costs of keeping the EUnion on life support have mounted exponentially and continue to rise.
With the new, expanded Greek bail-out, the Dutch are on the hook for 7.8 bln euros (NL). The 30 bln sweetener offered to banks that take the 50% haircut will cost us another 1.8 bln. But this is only the case if all euro zone countries, even the basket-case PIIGS, contribute. If not, we will be on the hook multiples of that number, increasing our sovereign debt. If then our AAA credit rating is downgraded, this will cost us a minimum of 8 bln in increased interest, YEARLY!
Imagine this: If a 1 billion budget cut all but obliterates the Royal Dutch Armed Forces, what 8 bln yearly extra interest payments alone will do, never mind the rest. Are you still sure, at this stage, that pulling out is more costly?