As Predicted, Spain on the Brink of Collapse

The tentacles of the international banking cartel are about to envelop the fifth most important economy of the old continent

The Independent

European leaders meet in Brussels today amid growing fears that Spain, Europe’s fifth-largest economy, is preparing to ask for a

The horns of the depression are in Spain's rearview mirror. An aid package is in the works to rescue one more failed State.

bailout which would dwarf the €110bn (£90bn) rescue plan for Greece.

The Spanish government yesterday dismissed reports that it was already in discussions with the European Commission, International Monetary Fund and the US Treasury for a rescue package worth up to €250bn.

Officials in Madrid, Brussels and Paris were forced to deny that a Spanish bailout – which would take the European debt and euro crisis into a potentially dangerous new phase – was on the Brussels summit agenda.

“Spain is a country that is solvent, solid and strong, with international credibility,” said its Prime Minister, Jose Luis Rodriguez Zapatero. The European Commission spokesman said: “I can firmly deny [that a Spanish rescue is under discussion]. I can say that that story is rubbish.”

Brussels diplomats have been at pains to send out feel-good signals ahead of a summit in which Europe’s leaders are supposed to take the first steps towards more disciplined and co-ordinated, control of national finances. Those reforms are meant to restore confidence in the euro and underpin the €750m EU and IMF safety-net, created last month for euroland countries that lose the confidence of the financial markets.

However, it is proving hard to shake off persistent market fears about Spain, which, if it needed a lifeline, would swallow up a large part of the emergency fund. Worryingly for the EU, the doubts about Spain – whether real or driven by speculation – are eerily similar to the gradual seeping away of confidence that sent Greece into a financial death spiral in March and April. The Spanish government’s cost of borrowing hit a new record yesterday. The interest rate gap, or spread, between 10-year Spanish bonds and their German equivalents, rose by more than 0.10 of a point to 2.23 percentage points.

A senior Spanish banker, Francisco Gonzalez, chairman of the BBVA financial services group, confirmed that foreign private banks were now refusing to provide liquidity to their Spanish counterparts. “Financial markets have withdrawn their confidence in our country,” he said. “For most Spanish companies and entities, international capital markets are closed.”

As a result, the European Central Bank is said to have provided record amounts of liquidity to Spanish banks in recent days. The closure of bank-to-bank credit to Spanish institutions recalls to some market commentators the ripple of crisis through the global financial system after the fall of Lehman Brothers in the Autumn of 2008.

The IMF chief Dominique Strauss-Kahn is expected in Madrid tomorrow to see Mr Zapatero – but brushed off speculation of a crisis. “It’s a working visit,” he told reporters in Paris. “I am in France [today] – are there such rumours about France?”

Fears over Spain’s finances checked the recovery of the euro on money markets yesterday. The single currency lost much of the gains it had made in the past seven days.

One of the proposals on the table at the Brussels summit is public “stress tests” to force banks to reveal the state of their books. The Spanish government offered yesterday to open the books of its own private banks unilaterally to prove that they were sound.

Today’s summit in Brussels was intended to be a time for the EU leaders to catch their breath and discuss ways of restoring the euro’s long-term credibility. The threatened Spanish crisis may blow all that out of the water.

Despite an apparent rapprochement between Paris and Berlin this week, President Nicolas Sarkozy and Chancellor Angela Merkel remain deeply divided on how to prevent the currency and debt crisis from dumping Europe back into recession. Mr Sarkozy has agreed to drop his proposals for new institutional machinery for a political “government” of the euro by its 16 member states. Ms Merkel prefers to talk of a vague “governance” of the euro, and European state spending, by all 27 EU governments.

More fundamentally, Paris is deeply concerned that the austerity plans announced by Berlin last week could – on top of budget cuts in other countries – plunge Europe into crisis.

The French fears were echoed yesterday by the billionaire investor, George Soros, who warned that Europe would almost certainly face a recession next year which might generate “social unrest” and the kind of populist nationalism seen in the 1930s. “That’s the real danger of the present situation – that by imposing fiscal discipline at a time of insufficient demand and a weak banking system… you are actually… setting in motion a downward spiral,” he said.

The collapse of Spain’s housing boom has helped fuel a deep downturn which has sent unemployment spiralling to 20 per cent, the second worst in the EU. Mr Zapatero introduced a range of measures last month, including spending cuts of €15bn over two years and reductions in public sector wages and spending. Unions have called a general strike over labour reforms.

Government Austerity: The Match that Lights the Fire

PrisonPlanet.com

Top historians, social and financial analysts are warning that the draconian austerity measures currently being prepared by governments in the west will cause riots and even revolutions as people react with fury in response to their jobs, savings, basic public services, pensions and welfare money being seized by the financial terrorists who caused the economic collapse in the first place.

British historian Simon Schama is a creature of the establishment and he makes it clear whose side he is on at the end of his recent column for the Bilderberg-controlled Financial Times entitled, The World Teeters on the Brink of a New Age of Rage. However, the fact that he is an elitist at heart only makes Schama’s predications all the more alarming. This is someone on the inside who is painfully aware of the fact that the imminent attempt on behalf of the globalists to enforce so-called “austerity measures” on the people of the west, which in reality is a euphemistic term for the next leg of the new world order, is not just going to cause riots and mass social unrest, but it could even lead to revolution if the elite allow the situation to spiral out of their control.

Schama’s forecast that “we might be on the threshold of an age of rage” is not to be taken lightly. This isn’t coming from Alex Jones, Max Keiser or Gerald Celente, it’s coming directly from a man considered to be Britain’s pre-eminent contemporary historian.

Schama writes that the coming austerity measures, particularly in America where anger “targeted at an elitist federal authority is raging through the US like a fever,” will require “Barack Obama to be more than a head tutor. It will need him to be a warrior of the word every bit as combative as the army of the righteous that believes it has the Constitution on its side, and in its inchoate thrashings, can yet bring down the governance of the American Republic.”

In other words, Obama will have to ditch “misplaced obligations of civility” and become an authoritarian enforcer in order to emerge successful against the rising tide of Constitutionalist rage that will be directed against the coming austerity fascism.

We’ve all seen the numerous videos of protesters in Greece rioting, fighting police, and even firebombing banks and killing people in reaction to the crippling austerity measures imposed by the government in the name of appeasing the mandates of the European Union’s near $1 trillion dollar bailout package. However, the establishment media as a whole has largely failed to identify precisely what those austerity measures are, and more importantly how they will almost undoubtedly lead to massive social dislocation in the UK and the United States when implemented.

The austerity measures currently being considered and indeed implemented in the UK and other European countries, with the United States not too far behind, can be summarized as follows.

– Massive cuts to public services that are two or three times larger in size than anything we’ve witnessed since the second world war.

– Both capping of and reduction of salaries for public sector workers that will inevitably lead to huge strikes, bringing whole countries to a standstill for weeks on end, further eviscerating any economic recovery. Public sector workers in France and Spain are already staging large industrial strikes. As we saw in Greece, strikes routinely lead to riots and violence.

– Shocking tax increases that if they mirror previous trends could amount to an astounding 98 per cent tax on all earnings over a low level of income. Such increases would virtually eliminate the middle class because all earnings over around £20,000 ($28,000) would almost entirely go straight to the government. Knowing that such exorbitant hikes would cause millions of people to try to evade tax, thousands of new tax inspectors are being hired to crackdown on evaders. In the United States, 16,000 new IRS agents were recently hired in anticipation of people avoiding massive tax hikes that are in the pipeline, as well as new taxes as a result of Obamacare, which will begin to be implemented in the coming years.     Read More…