Posted Jul 3, 2013 by Martin Armstrong
The European Troika has now provided Greece with a new ultimatum. Greece must show by the end of the week that it can adhere to the agreed terms of the bailout. Both the layoffs in the public sector than in the privatization process has seriously lagged behind the agenda in Greece and to receive the next tranche, the Troika is demanding action and proof.
In France, instead of stopping the crazy socialism and raising taxes that have been wiping out jobs and economic growth, austerity has taken the form of turning out the lights at night in Paris. Starting July 1, 2013, Paris is dark at night. No billboards, no office and no public buildings may shine in the light any more. There is even a fine, of course, if you forget to turn off the light you must pay 750 euros. France believes it will reduce its energy consumption saving up to 200 million euros.
Portugal’s political stability is in danger as the Portuguese finance minister, and other ministers, are now threatening to resign.The demands for new elections are growing much louder. The massive uncertainty over Portugal’s political future has resulted in the Portuguese ten year bonds to rise to the 8% interest rate level.
Meanwhile, Standard & Poor’s has downgraded German banks. They lowered the credit rating for the German bank, Barclays and Credit Suisse. The investment division of Deutsche Bank was extremely vulnerable, the capital is not sufficient to cover liabilities.
Germany’s main opposition party’s candidate running against incumbent Chancellor Angela Merkel, Peer Steinbrück is a former finance minister under Merkel and an economic expert according to the SPD. But while promising to create new jobs, he intends to raise taxes and fails to comprehend that government cannot direct the economy. This old idea is destroying Western Civilization and Germany is going to drag Europe down. Once the general understanding that the German banks are really in trouble hits home, there will be no place for capital to hide inside the Euro.