Euroland is in deep trouble. When its financial system fails, it will bring ours and others down with it.
The “madness” that has infected their politicians has also affected our stock market. News of a central bank consortium that will ride to the rescue has buoyed our markets. Why stock markets would rise in light of what is coming may eventually be the subject of a new chapter in a future version of “Extraordinary Popular Delusions and The Madness of Crowds.” As expressed by Michael Panzner:
I can’t quite reconcile Wall Street’s almost surreal notion of where things stand — you know, “just close your eyes and buy, buy, buy” — with Main Street’s ever more pessimestic view of the reality on the ground — let’s call it “cry, cry, cry.”
There is no way out for Europe or the US. There are economic solutions, maybe, but none are palatable for the political class. The political class of both continents have no intent on solving the problem(s). The objective is to extend the system for as long as possible. For reasons why, see Kevorkian Economics.
Central Banks are bound at the hip with respect to survival. The failure on one continent could trigger the failure on both. Hence the joint action by Central Banks to put out the hottest fire at the moment which happens to be Greece (and Europe).
Bankrupt nations bailing out other bankrupt nations cannot succeed long term. Taxpayers everywhere are being sacrificed so that politicians may continue to live high for a while longer. They pretend everything is just fine, while their private jets await emergency escapes from the coming taxpayers with pitchforks.
Charles Hugh Smith describes the political behavior as perception management. It is a form of propaganda designed to avoid change or preserve the Status Quo. He knows this approach will fail:
Human behavior, as reflected by the stock market, can be manipulated in the short-term: yet another announcement that Greece has been saved is followed by a 200 or 300-point rally, which fades as the tides of reality soon wash over the sand castles of perception management.
The Status Quo in Euroland can set all the agendas it wants and announce all the rescues it wants, but none of that propaganda will reduce the crushing debts by a single euro. Sand castles are no match for the tides of reality.
Mish’s conclusions on Europe are as follows:
That the ECB, FED, Bank of Japan, and Swiss National bank have to provide liquidity to calm the markets is hardly calming news, yet the market continues to react well to band-aid and rubber-band measures … for now.
It won’t last because nothing has been solved and attempts to revive the Eurobond idea is Dead-on-Arrival.
Either Merkel and Sarkozy are attempting to buy time, hoping beyond hope to preserve their failing legacies, or are delusional.
I suggest a combination of the three.
The Central Bank agreement is no solution, regardless of how euphoric our stock market becomes. At best, it is a band-aid that will cover the problem(s) for a while longer. Yet the infection continues to fester and become worse.
Gerald Celente, another realist, describes what is here and what is coming in this video: Things Are Going to Get Much WorseSociety Is Breaking Down.
The charade is coming to an end. Don’t be caught in the explosion.
