EUROZONE NEW DEAL IN THE WORKS!

27 Nov

LATE EVENTS:

Sunday 20th: Spanish General Elections.

Wednesday:BAROSSO Presented his EURO BONDS PROPOSAL.

Thursday: Summit: MERKEL,SARKOZY,MONTI .Leading to a new EU Treaty change from MERKOZY

coming days.

1.SPAIN NEW GOVERNMENT

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As forecasted the Partido Popular won elections with a record absolute majority.

Primary concern for new Government will be how to best combat the extremally high unemployment

numbers. Today with 22% unemployment a national tragedy.Comparison with other nations unemployment

development post 2008 crisis Spain still no turning point in sight! When comparing with ex Germany with

a strong Export lead Economy of Big and Medium sized companies very diversified. Comparison halting with

Spain Industrial structure widely different.Dominance by medium and small size companies not so

Internationalised.German employment figures have risen not fallen!Why such a difference? Personally I think

Spanish Banking system is the big culprit . Key issue for new Spanish leaders will be how to FORCE

Banks to start lending again to small enterprises heavily crippled from access credits from Banking system blown

to dust by the REAL ESTATE BUBBLE burst 2008.Recapitilisation of BANKS and restructuring to allow easier

access to credits for new employment growth in a larger scale.Seems Spanish Banking system in General with a few

exceptions needs to be reformed a task for the new Political leaders .This will be KEY POINTS for Mr Rajoy

coming monthes. A radical idea should be to start a few new BANKS with sole mission to recapitilize all

crippled  small Business .Furtermore a total restructuring of Industry to raise competiveness and Internationalisation.

SPAIN must put to use all of it´s reserve of young well educated persons.!

Institutions with capacity to evaluate new Business Ideas and provide riskcapital for starting new enteprises a

KEY FOR FUTURE INDUSTRIAL DIVERSIFICATION. GOOD LUCK Rajoy!!

Many parts of governing will be like PUPPETS on a string on remote control from Brussel,Berlin.

BAROSSO EURO BOND PROPOSAL

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His proposal was dismissed in a harsh manner from MERKEL as totally inappropriate etc. The different

alternatives only one could be implemented without  change of EU Treaty a process that need too long

time to be an urgent solution to crisis. Anyway EURO BONDS is ruled out as long as no valid STABILITY PACT

consented which seems to be in vivid discussion  MERKEL-SARKOZY soon to be released.A strict DEFICIT and DEBT

discipline  control mechanism in German “HAUSHALT ORDNUNG” . THE Northern European style of discipline

will be dictaded from  EU authorities.If this turn out to be unsuccesfull the entire EUROZONE will disintegrate

and the EURO currency seize to EXIST!! Darkage for the world Economy at worst!!

BANK TAX  AND REGULATIONS

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If a 1% Financial transaction tax implemented only in the EUROZONE could potentially bring down

GREECE,ITALY,SPAIN, PORTUGAL,IRLAND deficits to a 60% level in a 3-4 year period!!

CDS “Credit default swaps” need to be regulated !=Insurance policies on assets not owned!!

Just a high speculative instrument with toxic economical effects.

Ratings from Rating Institutes are really INSIDE TRADING= ILLEGAL!!

Ratings on Nations questionable!!Modification of regulation needed.

ACTUAL BOND MARKET AND ECB INTERVENTIONS

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Just during last 2 weeks we have seen ever increasing volatility and larger spreads  for a number

of EUROZONE Nations.

Warning lately from German DWS  about  a possible breakdown of EUROZONE BOND MARKET.

The system cannot any longer stabilize it self! IS this the effect from HYMAN-MINSKY 2nd theorem

on Finacial Instability on Income-Debt relationship of Bonds.Hyman Minsky Theory. After a long prosperous

period follows a speculative -ponzi unit of instability. In this situation no other solution than trigger the

Waffen Merkels ultimate weapon the ECB BAZOOKA  to buy Government Bonds in a large scale for some time.

CONCLUSIONS

———————————————————————————————————————-

As long as no STABILITY PACT  from MERKOZY  in function means of last resort is ECB ONLY!

Uptil now ECB have bought 3% of total EuroZone BONDS. UK 20%, US 13% of their repective BOND MARKETS.

Buying in the secondary Market will be enforced coming weeks to stabilize MARKETS.

LENFRED AS MR BOND on a RESCUE EURO MISSION

To be continued………….

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