The ECB’s Spanish Inquisition might yet do for President Obama
Having lied his Presidential head off since last October
about unemployment and economic growth inside the US, Barack Obama is
now looking to delay every possible factor that might find him out
before election day….and any scam he can invent to create some feelgood
among the voters beforehand.
Er, no actually. Because demand for gas at the US pumps is low,
thanks to not many people having any money….as a result of the
spectacular but mythical recovery of the US economy….despite two
previous QE-hoses having been turned on.
Soooo, QE has no effect, but we’re doing it again. The markets know
that: but they’re too dumb to learn, so they’re running oil futures very
high. Sometimes this can be self-fulfilling, but whatever happens the
incumbent White House suit isn’t going to get low gas prices.
You see, this is how neocon globalist bourse-dependent capitalism
works – ie, badly. But the Black Dude needn’t turn to his Xanax supply
just yet: Romney slipped a few points over the weekend, and seems to
have even less to say than Obama.
In turn, a very fat German bottom is sitting on the EU’s Vesuvius.
She isn’t doing this for Barry’s benefit, by the way: she’s doing it (a)
because she can’t decide what to do and (b) she wants all those little
Deutschmark notes and bank firewalls ready and in a row just in case
things turn bad. But with Spain and Italy on the sick list now, she
isn’t going to expel Greece.
The Troika doesn’t report on Greece until the first week in October,
but time lies heavy on the EU supertanker: the EU leaders won’t have
their summit again until October 18th. With a press conference full of
bromides on 20th, that leaves just 17 days before the US Poll. Hardly
enough on its own to knock Obama off course.
But what of Spain? Well, it’s already clear that a combo of disguise,
spin, euphemism, printing and Andrexaghi paper will be used to try and
plug the hole in that dyke. But such remains a narrow and slightly
cock-eyed way of looking at things.
For the last few weeks, the focus has been very much on sovereign
insolvency. However, eurobank liquidity (including in the UK) remains
critically clogged up…and exposure to debt potentially
armageddonouddahere. When Spain negotiated ECB approval for a bank
liquidity programme in late June, Reuters noted caustically:
‘An economy ministry spokesman told Reuters to ask the EC where the
money would come from. A press officer at the Commission said to ask
Spain.’
This was a prescient observation about buck-passing, which is
something the eurozone does when can-kicking has begun to pall. The
overwhelming provider of liquidity to Spanish banks right now is the
European Central Bank. But Mario Notadraghimyfeet wants to make this a
sovereign concern and shift the responsibility back to the Spanish
government. It’s a vain hope this one, because the Spanish government is
broke and its economy – having gone with the Troika’s neocon austerity
bollocks – is halfway round the S-bend.
The recurring theme you may have noticed in this piece is that the
current model of capitalism is AFU, and as that’s not unusual, we can
safely conclude that it is SNAFU. Now the irony here is that Obama – who
the gullible thought would deal with the madness once and for all –
didn’t…of course. So his policy emptiness – ok let’s call a spade a
spade, cowardice, just might be about to leap right up and smack him in
those gleaming teeth.
If the focus returns to private bank collapses, it could indeed do
that. I sense that Mario might be too clever for his own good at times –
and this may be one of them. Aside from the ECB (and as we’ve seen,
Draghi wants this to be a finite arrangement) the only other rescue
vehicle for private Spanish banks is the €100 billion bailout that the
eurozone and Madrid have agreed in principle.
But rather than simply hand over the bailout money – Greece has been a
salutary lesson – Mario and all the other Goldman accolytes want to
ensure that Spain ‘restructures’ its banks…aka, cheats its creditors by
having a national bad bank for toxic assets, and crewcuts for those
creditors. The ECB is playing hardball on the issue. It is yet another
impasse; but this one could explode without ringing to warn the media
beforehand.
The key factor here (it seems to me) is the threat to Franco-German
banks…and Britain’s glitch-Queen RBS. Some of the exposure to Spanish
property among this august group is not only too horrible to
contemplate: it involves a sector whose recovery could be a decade
away….and far too much real money for any firewall. Further, I’ve yet to
find a banker anywhere (or an analyst, or a credit dealer) who can
explain exaxctly how a firewall might work, the world outside the walls
being full of Joshuas just a-leapin’ an’ a-hollerin’ an’ a-blowin’ dem
horns.
So let us all beyond the UK this Monday morning (where it’s a Bank
Holiday) pray that Mario and Herman and Geli and Wolfpack know WTF
they’re doing in this game of poker. The Obamas and the Kings and the
Weidmanns and the Sloggers should kneel for a few moments and fire off a
message up to Whoever might be out there. And let us also pray that the
British, French, German and European central banks have a critical
crisis path in place, just in case.
Stay tuned.
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