One of the favorite past time activities for EU leaders during the Eurozone debt contagion is to fly all over Europe and meet, meet and meet again. Sure, meetings are necessary in order to have discussions about how to resolve the crisis. Most of the meeting have resulted in absolutely nothing more than a free trip for politicians. This meeting will take place on October 18th through October 19th in Brussels.
So far, none of the meetings have sowed seeds for fruition despite what dumb money market participants have claimed and how they have reacted. The fact is that geopolitical as well as geoeconomical problems are not priced in the market, not at all. The markets have priced in that the problems will be resolved.
Greece will launch another unsuccessful attempt to convince European counterparts that it deserves another tranche of the previously agreed bailout despite coming short on the extreme austerity measures it has to meet. The imposed austerity measures will prevent Greece to enter a period of sustained economic growth this decade, but it will please the Troika whose main objective is to force the Greek government into receivership.
This will take the last remaining sovereignty away from the Greeks who cheated their way into the Eurozone with the help of Goldman Sachs and some great financial engineering. Now the Eurozone suffers as a direct result of it and the problems have spiraled out of control. The majority have not comprehended that in order to protect the core of the Eurozone, Greece needs to be allowed to leave and restructure without the burdens imposed by the Troika.
Spain continues to refuse to request a bailout as they do not want to be caught in the same misery as Greece. They clearly understand that the second they beg for a cash infusion from the €500 Billion ESM, they will be subject to similar austerity measures as Greece. Spain faces a new set of problems with the very likely secession from Catalonia which may be followed by the other 16 autonomous regions. Spain does not need additional pressures from outside forces as their country is on the brink of being torn into pieces.
Some dumb money participants hope this summit will uncover how much work remains to be done. The work that is required has not even commenced. The Eurozone is running out of time in order to address the core of the problems and instead of asking smart money for assistance they continue to waste the most precious commodity on meetings with the dumb money camp.
The IMF, another dumb money institution claimed that the ESM as well as the ECB’s bond buying foolishness needs to be deployed in order to what they think will stabilize the markets. In reality, those two facilities will add fuel to the fire for the Eurozone debt contagion. The only thing the ESM and the ECB’s bond buying program will be able to accomplish is to delay the effects of the debt contagion.
The longer we will wait to make the smart decisions the worse the impact will be. The Eurozone periphery is already being torn apart and the increased velocity will hit the core and create a financial supernova which will lead to a financial meltdown and the ripple effects will last twice as long as the delayed decision. It is time for smart money to move in and take control before it will be too late.