This morning’s key headlines from GenerationalDynamics.com.
* Sheer desperation grows among Europeans
* A sense of panic among politicians in Europe
* Sarkozy: ‘Our destiny will be decided in the next 10 days’
* €440 billion will become €2 trillion through ‘leverage’
* Violent riots in Athens as Greece’s parliament passes new austerity measures
* Turkey’s army invades northern Iraq pursuing PKK terrorists
* Vietnamese officials banned from playing golf
* Carla Bruni-Sarkozy gives birth to girl
Sheer desperation grows among Europeans
On Wednesday morning, I was listening to Ralph Silva, analyst with the Silva Research Network, on CNBC. Here’s what he said (my transcript), but just the words on paper don’t convey the full meaning:
“I think they’re gonna support the euro. They’re GONNA support the euro.
[Question: Are they going to announce how they’re going to do that?]
Well, if they start doing that, then the market’s going to correct itself, and that’s going to cause some problems.
And that’s why I honestly believe they’re waiting until pretty much the last minute, because they DO have some kind of solution. I’m SURE they have SOME KIND of solution. But they don’t wanna mention it because it has to be a HUGE number, and that will cause EXTREME volatility in the markets, and right now, we don’t really need that volatility. …
The truth is that 2 trillion, and probably more, will probably have to be invested.”
What mere words don’t convey is the sense of panic in his voice. “They DO have some kind of solution. I’m SURE they have SOME KIND of solution.” His voice was conveying desperation.
A sense of panic among politicians in Europe
“The situation has been deteriorating dramatically, after Moody’s put the French credit rating on a review. European officials are now warning that the eurozone may be in danger of unraveling unless the Sunday’s summit was able to take a big decision. German politicians continued yesterday to lower expectations, while the British papers seem to be convinced that the Big Bazooka may indeed come out on Sunday.”
Sarkozy: ‘Our destiny will be decided in the next 10 days’
France’s president Nicolas Sarkozy reportedly said the following (translation):
“The choice that France made for Europe, against the backdrop of Franco-German reconciliation, is a choice that no one should question. France will not stand alone. Our continent, I should say the European continent, is the continent that has experienced the two most barbaric wars in the world. It was not the Middle Ages, it was the 20th century, on two occasions. We are in the early 21st century. I’ll never let this destroy European heritage that has been transmitted by the wisdom of our elders, who, with war as a foundation, have managed to build reconciliation. Europe is the most beautiful construction in the service of peace ever invented by human beings. There is no place in the world where they have succeeded in creating an alliance so integrated among countries that are so different, in order to bring peace. I will not let this heritage be destroyed. …
If you let the euro be destroyed, you take the risk of destroying Europe. Those who would destroy the euro will bear the responsibility for the resurgence of war on our continent.”
The unstated subtext of Sarkozy’s statement is this: The Germans attacked France in two barbaric wars in the 20th century, and if the German taxpayer refuses now to bail out France and the rest of Europe, then Germany will be responsible for another barbaric war.
€440 billion will become €2 trillion through ‘leverage’
According to expectations inferred from various news reports, the meeting on Sunday, October 23, will announce the following:
- Greece will get the next €8 billion bailout payment early in November.
- It’s unknown whether Greece will be forced to default now or later, but a default will involve a “haircut” (loss of principal) of at least 50% to investors.
- The €440 billion European Financial Stability Facility (EFSF) will be increased to €2 trillion by means of “leverage.” Instead of bailing out a bank or country by guaranteeing its bonds, the fund will guarantee (or “insure”) only 20% of the bonds. That’s a great idea! How can anything possibly go wrong with that?
Some analysts suggest that this “insurance” concept will have unintended consequences and actually hasten a crisis, since the 80% uninsured bonds will create a dangerous disequilibrium. Guardian
Violent riots in Athens as Greece’s parliament passes new austerity measures
Furious demonstrators rioted in from of Greece’s parliament building in Syntagma Square in central Athens on Wednesday, for the largest and most violent anti-austerity protests so far, on the first day of a two-day strike that’s bringing the country to a standstill. Explosions could be heard as protesters throw rocks and Molotov cocktails, while police responded with tear gas and stun grenades. One protester was quoted as saying, “Who are they trying to fool? They won’t save us. With these measures the poor become poorer and the rich richer. Well I say: ‘No, thank you. I don’t want your rescue.'” On Thursday, the parliament will be voting essentially to dismantle Greece’s social system, with such measures as lower wages, lower pensions, more tax rises, more spending cuts, layoffs of tens of thousands of public sector workers, and repudiation of many labor union collective bargaining agreements. Protest rallies were also organized in other Greek cities, including in Thessaloniki, Patra and Volos, as well as on the island of Crete. Kathimerini
Turkey’s army invades northern Iraq pursuing PKK terrorists
Turkey’s army crossed the border into northern Iraq on Wednesday in pursuit of PKK militants, backed by fighter jets bombing PKK camps, with commando units being dropped into northern Iraq by helicopters. Clashes were still under way at this writing late Wednesday ET. The incursion was in response to simultaneous coordinated attacks by some 200 Kurdistan Workers’ Party (PKK) terrorists on Turkish security outputs in southeastern Turkey, killing at least 24 soldiers and wounding 18 others. Hurriyet (Istanbul)
Vietnamese officials banned from playing golf
Dinh La Thang, Vietnam’s transport minister, posted a statement late on Tuesday ordering all senior ministry officials and executives of corporations not to play golf. According to the statement, some ministry officials “have not actively given direction or administered their work, leading to the slow handling of affairs, which affects progress on projects and general operations One of the causes of this condition comes from staff spending too much time playing golf (including on holidays).” Telegraph (London)
Carla Bruni-Sarkozy gives birth to girl
Carla Bruni-Sarkozy, the wife of French President Nicolas Sarkozy, has given birth to a girl at a maternity clinic in Paris. The girl is the French first couple’s first baby since their marriage in 2008, although Bruni has one 10-year-old son from a previous relationship and thrice-married Sarkozy has three aged 14 to 26. Sarkozy was not present for the birth, as he was meeting with financial officials in Frankfurt, after an early morning visit to Bruni in the hospital. AFP