World View -- European Council Deliberately Lied About Spain Bailout Policy

This morning's key headlines from GenerationalDynamics.com
  • Russia says it will suspend 'new arms shipments' to Syria
  • European Council deliberately lied about its bailout policy for Spain
  • Germany and France have negative bond yields, while Spain's surge
  • No relief in sight for Greece at Monday's Eurogroup meeting

Russia says it will suspend 'new arms shipments' to Syria

Russia will deliver Mi-25 gunships to Syria on time
Russia will deliver Mi-25 gunships to Syria on time

Russia has been continually embarrassed for its support of the regime of Syria's president Bashar al-Assad, which has been maiming, slaughtering and exterminating innocent Sunni Arabs. To show what good guys they are after all, Russia has announced that they will not deliver any new types of weapons or sign any military contracts with Syria until the situation there stabilizes. However, Russia is leaving open the possibility of continuing to deliver weapons under old contracts. In particular, Russia will deliver a group of Mi-25 attack helicopter gunships to Syria on time. Ria Novosti and Ria Novosti

European Council deliberately lied about its bailout policy for Spain

For years, I've reported on numerous lies by European officials with reference to the euro crisis. Last year, European officials told one lie after another with respect to the various bailouts of Greece, and once when EU officials were caught in a series of major lies about Greece a couple of months ago, Eurogroup chairman Jean-Claude Juncker was quoted as saying, "When it becomes serious, you have to lie," as I reported at the time.

So I guess it's becoming "serious" again, because the European Commission told some outrageous lies coming out of the June 28-29 meeting of the eurozone leaders. In "30-Jun-12 World View -- Germany and Angela Merkel cave in to Italy and Spain", I summarized the agreements, including the much touted agreement that the European Stability Mechanism (ESM) bailout fund would be authorized to lend bailout money to Spain's banks, so that the debt will not appear on the books of Spain itself.

Well, apparently this was a full-throated lie by the European Commission (EC). It turns out that countries will need to provide guarantees in return for the bank aid that the ESM gives to the country's banks. According to one euro zone official:

"There is some degree of mystification going on here ... in the broader public who think that under current rules the ESM could all of a sudden end up owning [the Spanish bank] Bankia with the full risk of Bankia on the balance sheet of the ESM. This is very much not the case."
EuroIntelligence notes that the EC is trying to blame "the broader public" for this lie:

"It is preposterous to argue that the fault lies with the broader public as he suggests. It was a deliberate misrepresentation of a policy by the European Council. If this official is right, it means that the ESM will not ever inject capital into the banks. Now it all makes sense why we don't need a treaty change. If you don't change the policy, you don't need to change the treaty."
This means that Germany and Angela Merkel didn't cave in after all, as had been reported at the time. The culture of fraud and extortion is alive and well. Reuters and Euro Intelligence

Germany and France have negative bond yields, while Spain's surge

Last week, we reported that Denmark's central bank is "paying" a negative interest rate on certificates of deposit, which means that it costs you something to store your money in Denmark's banks for safekeeping. On Monday, short-term debt offered by Germany and France had negative yields -- -0.034% yield for 6-month bills from Germany, and -0.006% yield for 24-week bills from France. Meanwhile, 10-year bond yields for Italy and Spain have been surging. The yield was 6.1% for Italy, which is considered unsustainable, while it was 7.1% for Spain, considered a major crisis level. Reuters

No relief in sight for Greece at Monday's Eurogroup meeting

A meeting of the Eurogroup in Brussels is showing no sympathy for Greece's hope to get an agreement to delay new austerity measures. Because Greece is so far behind on its previous commitments, a Greek government spokesman said that they would not be seeking an immediate renogtiation of the bailout terms:

"At the moment, we are way off our targets. We cannot negotiate because to do so you need to give and take. The clear impression we got at the recent EU leaders’ summit was that there are some who are looking for an excuse to push us out of the euro. But most people are telling us that if we prove we are moving in the right direction, there will be room to negotiate."
Luxembourg's finance minister agreed:
"We have to see how realistic the things are that we want from Greece. I think we can accommodate Greece, but Greece must also know that it’s not a one-way street. Greece has to enact a series of reforms that we have demanded; we will need to hear the Greek minister about this."
Kathimerini

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