Who can blame the Greeks for voting to stay in the Euro. Their credit cards are maxed out and this vote will give them another card. Even if it is for a short time, it keeps the party going. The Titanic – in this case the Euro – is getting closer to the iceberg and Greece just stayed in the bar and opened another bottle of champagne. The end is near; this is not the time to celebrate.
Greece is getting all the headlines, but other stories in Europe are, in our opinion, more important:
1) Interest rates in Spain shot up once again overnight and the ten-year bond now yields 7.18%. The yield was 4.85% on March 1st. The bank bailout in Spain is not working and Spain and the banks in Spain continue to get downgraded.
2) Interest rates in Italy rose to 6.1% this morning. This is higher than the critical 6% most economists say is the threshold that rates can’t exceed in order for Italy to remain solvent.
3) Although the Greeks want to stay in the Euro, the Germans do not want Greece in the Eurozone anymore and are starting to consider life after the Euro. Germany is getting pressure from abroad to save Europe, but pressure at home is not to bail out other countries. In the latest poll, only 52% of Germans want to stay in the Euro.
4) There are serious discussions in Britain about leaving the EU. Britain does not want to transfer anymore sovereignty to the EU and has no desire to bailout the Eurozone countries. It doesn’t help that Britain has to wait for an EU court to allow deportation of radical Muslim clerics because of human rights concerns. Not for the citizens, but for the radical clerics.
5) France’s Socialists won control of parliament this past Sunday, handing newly elected President Francois Hollande the convincing majority he needs to push through his tax-and-spend agenda. The new socialist government also recently moved to lower the retirement age from 62 to 60 for certain workers, increasing the burden on the French government.
Your THOR Team