Spanish Bond disaster and IMF panic


ECONOMY…by David Malone

Today Spain had a bond auction fail on a sale of its debt. That is as serious as it gets.

A bond auction failure is the red light flashing. It’s very bad indeed especially at this time. Spain cannot afford a second. A second is not the red light flashing but when no one is noticing the light any more and the bell has shaken itself lose from the wall from ringing while people trample over each other trying to get to the exit first.

Spain put up 4-5 billion as its target. Not huge. Just testing really. No one wanted them.

They offered a massively higher rate, up from 0.951% to 1.743%. The numbers look small but it means Spain is now having to pay over 50% more. That is a death sentence if it stays like that.

So will it stay like that? Well probably not. It will probably go higher. Because even at that massive rate Spain still only managed to sell 3.26 billion of 4-5 billion on offer.

That is the bond speculators sharpening their steely knives. Portugal will be a side show if Spain doesn’t convince the world this was a one off aberration. Merkel in Germany already said this is very dangerous. And she is right. Spain is the one that bring s them all down if she goes.

The IMF is panicking. Strauss-Kahn gave a briefing in which he came out bluntly and said Europe must now have a central financial authority over its nations. It must have a unified labour market – meaning wages must drop everywhere and unions must be a thing of the past.

For Strauss-Kahn to say this is amazing. It is the Washington DC Free market zealots ‘telling’ Europe what it ‘must’ do. They know that is guaranteed to incite real anger. For him to say it tells me how worried he and his free market true blue believers are.

This is crisis time and no mistake. If Wall Street could get America to invade Europe it would because what is boiling up here could burn them all down.




This article is reproduced with thanks to David Malone. He is the author of the book Debt Generation. You can read and listen to excerpts from his book here: