08:24 – The news stories from the EU Summit-of-the-Month report that Merkel has backed down. Nothing could be further from the truth. With regard to the only thing that matters–Germany paying everyone else’s bills–Merkel hasn’t yielded a centimeter. The EUrocrats have simply spun a couple of minor decisions to appear major. All they’re about is allowing the leaders of Spain, Italy, and France to save face. Nothing has changed. There’s been a minor decrease in Spanish and Italian bond yields, but that’s unlikely to last long. The euro comes out of this conference no better off than it was going in, and probably worse. As always with the EU, it’s Videri Quam Esse.
I just issued a big purchase order for kit components to one of our three major wholesalers. I’ll get the other two issued today. Which means this weekend we need to get the piles of boxes that are currently stacked in the library downstairs to make room for the new piles of boxes that’ll be showing up soon.
17:29 – Even the columnists for The Telegraph, who are usually quick to see through the EUrocrats’ smoke and mirrors, are missing the point entirely this time. The so-called agreement they reached does not guarantee Spain and Italy anything. Everyone is talking as though Spain and Italy can now draw on EFSF/ESM funds to recapitalize their banks without those loans showing up on sovereign balance sheets and without implementing austerity measures. That’s wrong. Germany retains the absolute right to veto any such disbursements, and will do so unless Spain and Italy comply with previously-agreed conditions. Neither country can meet those conditions, which are economically and politically infeasible. In other words, Spain and Italy both walked away from the conference claiming that they’d gotten what they demanded. They did no such thing.