After my last diatribe, which the powers that be must have read, there was some serious central bank action to prop up the “markets”. So yet again we have another attempt at a “bear squeeze”. Gold got taken out and bank shares went to the races; even UBS was up 4% on Friday in US trading hours.
The Fed, the BoE, the ECB, the BoJ and the Swiss National Bank herded together to provide a line of dollar liquidity to the terminally disabled European banks. They know that Greece is going bust very soon and have provided a tenuous lifeline to give the Eurozone a very short breathing space to get serious, as Timmy Geithner, the arch believer in pixie dust, has just told them to do. He thinks they should fire up the printing presses, repeat the failed US experiment, stop bickering and get on with it.
Oh how they laughed! But he does have a point. If Euroland goes to hell in the proverbial it becomes a global, rather than just a European problem. As it happens the Europeans are even less clued up about this than the Yanks whose last civil war ended nearly 150 years ago. There has been infighting in Europe ever since and it is only going to get worse. Apparently the rumours of Germany leaving the eurozone have been pooh poohed by the establishment who know as much about the common man in “Prussia” as David Cameron’s Eton class of 1984 understands about life from the perspective of the average Brit; the square root of not very much.
The euro has been a politically inspired dream from the start but now you won’t find many in the real world who believe it has worked or is in their best interests. For the first time ever, a clear majority (60%) of Germans no longer sees any benefits to being part of the Eurozone, given all the risks, according to a poll published last week by Frankfurt Allgemeine. 66% reject aiding Greece and other heavily indebted countries and, ominously for la Merkel, 82% believe that her government’s crisis management is bad, and 83% complain that they’re kept in the dark about the politics of the euro crisis.
For Europe the fate of Greece is less important than that of their banks. Our former PM and “prudent” Chancellor has opined that they are seriously undercapitalised. Another round of bank bail outs and the voters will be truly revolting in all senses of the word.