About That Euro-Zone Crisis Thing?

It ain’t over – from Bloomberg:

Irish government bonds tumbled for a 13th day on mounting concern that the nation will be forced to restructure its finances.

Spanish bonds also headed for a 13th day of declines as data showed the nation’s economic growth stalled. French Finance Minister Christine Lagarde said yesterday that investors must share in the cost of safeguarding sovereign debt. German bunds advanced on demand for the safest assets, while Portuguese debt recovered from earlier losses. Italian bonds fell.

“Lagarde’s comments mentioned restructuring, and that’s another nail in the coffin” for so-called peripheral nations’ debt, said Steven Major, global head of fixed-income research at HSBC Holdings Plc in London. “There’s still a big constituency of investors and traders who have not recognized until now that restructuring could happen.”…

If that last bit is true – that a lot of investors have not recognized the prospect of restructuring (ie, default) – then we’re in a lot more trouble than I thought. Anyone who has looked at the so-called “PIIGS” (Portugal, Ireland, Italy, Greece, Spain) nations and not seen “utter freaking catastrophe” just must be blind, or stupid (and, unfortunately, is probably working for the United States Federal Reserve). These nations went on a massive borrowing spree and simply do not have the money to pay back the debt – and I mean, not ever: all of them are entering terminal population decline and so even if the economy improves, there won’t be enough surplus wealth to pay back all the debt.

And, of course, the economy is not improving – not in those specific countries, and not around the world. We got a year of “growth” as a result of central banks printing up vast sums of money and shoving it through the economy, but that didn’t get us what we need – a vast increase in wealth in order to service a debt burden far beyond the capacity of current wealth to pay. In my view, we never really will – default is the only way out. How that default will play out should be our focus – instead, we’re trying to pretend we won’t have to default, at all.

In a lot of was this is getting entertaining to watch. Sickeningly entertaining, at times, like a wild roller coaster, but entertaining all the same. We’re watching the fiat-money, usury-based global economy unravel. The people who run it are trying one desperate expedient after another to save it. Mindless “investors” (really, gamblers) move their money from one thing to another, mostly when cued up by the banksters to do it. This goes up, that goes down, talking heads proclaim…and in the background, the real economy grinds to a halt, and won’t start growing again until we admit we’re broke, and just get back to work.

2011 will be an interesting year – and I mean in the sense of the Chinese curse, “may you live in interesting times”.

HAT TIP: Mish’s

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