Everyone wants to know what day everything will change. I have been asked and asked and asked when the cat will come out of the bag, when Jack will jump out of the Box and when the weasel will pop. I have even been asked when the cow will jump over the moon but I will let the cat with the fiddle answer that one.
It is the date of the German elections – September 22, 2013.
Portugal is about a nano-second from blowing up. Their ten year yield is now north of 7% and their political coalition is a hair’s breadth from collapsing. The government has asked the IMF to delay their financial review until August citing political uncertainty.
Greece is right on the verge of coming unglued again. The Troika is demanding that Greece cute fifteen thousand Civil Service jobs. The unions are calling strikes once again and the current coalition rules by a handful of votes. Trouble is again on the horizon.
The Prime Minister and the government of Spain are accused of graft. The Spanish economy is worsening dramatically while unemployment surges. The Spanish banks are asking for their deferred tax assets to be guaranteed by the nation in another attempt to turn water into wine. Things are not going well.
France is in a recession and their economy is getting worse. Last Friday they lost the last of their “AAA” ratings and there is no joy in Paris I can assure you. Further budget cuts are on the horizon as encouraged by the IMF while Monsieur Hollande sinks in the polls.
Having identified all of this it will not matter until the day after September 22. Nothing is going to be allowed to upset the bratwurst cart and I mean nothing. If more money is needed it will be spent. If favors need to be called the phone will be in use. If Frau Merkel needs to give Mr. Draghi a new set of instructions; they will be issued. Whatever it takes. Whatever must be done. Nothing will get in the way of the Chancellor’s re-election.
In the days following the election, however, the gates of Hell may open and the brimstone may spill out. Every problem, question and issue that was delayed, put-off and tabled until the German election took place will rear their ugly heads for public inspection. Attitudes will change. Money will not be easily forthcoming and the noose will tighten around the necks of the troublemakers. Portugal, Spain, Italy, Cyprus and Greece will be wailing once again.