09:37 – The riots in Athens (which the Greek government describes as “peaceful protests”) were apparently on a larger scale than most of the MSM is reporting. The Greek government estimated that 70,000 “protesters” gathered in Athens alone. The strike leaders estimated 200,000. So, based on the likelihood that both estimates are biased, I’d guess there were probably about 135,000 Greeks taking to the streets in Athens, peacefully protesting by throwing bricks and firebombs at the cops. Meanwhile, in Spain it looks like Rajoy won’t be able to hold power much longer–perhaps not even the rest of this month–and there are rumblings from senior military figures. A coup d’état is by no means out of the question, particularly if, as they have announced they intend to do, Catalonia holds the referendum on independence that the Spanish government has forbidden. And the northern tier countries have announced that there won’t be any bank bailouts for existing bad debts, which really puts Spain behind the eight ball. The eurozone is coming apart at the seams.
15:03 – I’m just back from the dentist, and I see that, as expected, Spain has released its budget for next year. It’s a joke, also as expected. But almost no one gets the joke, it seems. Next year, Spain proposes to reduce the budget DEFICIT. Not the debt, you understand. The deficit. In other words, next year Spain plans to spend more than it takes in, again, just not as much more as they did this year.
That’s not going to help. The only way out of this mess for Spain or indeed any of the other countries with large debt piles, which is to say essentially all of them, is to spend less than they take in. Much less. What Spain should have announced was that it intended to reduce the DEBT by 10% next year and every year after that until it was retired completely. Instead, they announced that they plan to increase the debt next year, and presumably every year after that. Let me know how that works out. What’s that old saying about what to do when you find yourself in a hole?
Meanwhile, Berlusconi, who at least has more sense than the eurocrats, said publicly that Germany leaving the euro would be no bad thing. No kidding. No bad thing for Germany, at any rate. The real reason Germany is still in the euro is that it’s hoping to get out without it costing them anything more than they’ve already wasted on it. That’s not going to happen. The best Germany can hope for now is to get out as cheaply as possible. That’s not going to be cheap. But it will be a lot cheaper than staying in. What Germany still doesn’t get is that a promise to pay is not the same as payment. Right now, Germany wants to keep its exports to the southern tier at a high level to avoid unemployment and other undesirable economic consequences at home. But all those Mercedes-Benzes they’ve “sold” and continue to “sell” to the southern tier for what amounts to IOUs might just as well have been given away.