The Penny Drops

The biggest problem is the lost time, caused by the slimy invertebrates that constitute the euro-elite

At last, at the IMF weekend meeting, the EU leaders and technocrats realised they have a £1.7 trillion problem (at least): they realised that Greece cannot repay its debts and that the possibility of contagion spreading to the other PIGS quicker than Asian swine flu could blow the world economy away, and them with it.

There are major problems in the way, however, and the biggest is one they can do nothing about: the lost time, caused by the blinkered, bureaucratic, slimy invertebrates that constitute the euro-elite. At Spear’s we have been warning of the current situation developing for over two years already, and the reality is that the £1.7 trillion has been severely degraded in terms of effective value today – ‘A stitch in time’, and all that.

Then again, the £1.7 trillion rescue may never happen. The Karlsruhe Constitutional Court has not ratified Germany’s participation beyond the July ‘solution’ of boosting the EFSF up to €440 billion, which we described at the time amid the euphoria as ‘Too little, too late!’; the Bundestag must vote on this now redundant issue later this week, as the markets continue to outpace the leaden-footed proles.

Slovenia has said that it cannot ratify even that treaty before December, and the German electorate is up in arms, as are those of Holland and Finland, while the French have backed off considerably as they ponder that the cost of bailouts might be less than having to rescue their three largest banks from reckless euro-bond investments.

And if democracy does smash the cosy undemocratic manipulations of the eurocrats, then that will be exactly what they deserve for their overarching arrogance. And who’s to say that that will not be for the best, as the now-devalued £1.7 trillion mooted bailout may easily backfire, as the market takes the money and gets out of a long-term hopelessly unworkable monetary union? Would it be better to end it now then create a bigger bust down the road?

In the meantime, if any step fails or is delayed over the next six crucial weeks before Greece defaults again, then the eurozone will blow up and a global slump will be on the cards immediately. Stay tuned, and buy gold.