Home / European Crisis / Europe’s Bailout Rebound Lasts Three Hours. Reverses.
Print Friendly and PDF

Europe’s Bailout Rebound Lasts Three Hours. Reverses.

Written by Gary North on March 26, 2013

Yesterday, I ridiculed the idea that the Cyprus bailout would be the last one. Within hours, Europe’s stock markets fell. So did the euro. The initial optimism collapsed.

Why? Because the faceless bureaucrat who heads the faceless, unnamed EuroGroup admitted the truth: the rescue of Cyprus would serve as a model for the next round of bailouts. He said this: “If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’ “If the bank can’t do it, we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary uninsured deposit holders.”

That sent a clear message: anyone with a lot of money deposited in a bank of Italy or Spain or Portugal is at risk. He may wind up like all those rich Russians who thought their money was safe in Cyprus.

This meant that his official position — that Cyprus’s crisis and response was a one-time event — had been utter nonsense. The Cyprus bailout was merely the latest phase of the on-going crisis. Down went bank shares. Down went the stock markets. Down went the euro.

Wait! Wait! He then reversed himself again. He tweeted a message that Cyprus was a one-time event after all. Too late. The truth was out. The damage was done. The stock markets did not reverse again. Neither did the euro. Down most are the Spanish and Italian stock markets. No surprise there: they are an I and the S of PIIGS.

Europe’s politicians, bureaucrats, and bankers are fools. They got on the back of the tiger in 1999. They thought they could ride it safely. They can’t. They won’t. Neither will investors in Europe.

Continue Reading on www.mirror.co.uk

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

Comments are closed.