Europe’s debt crisis hit another milestone on Sunday when the French and Belgian governments agreed to nationalize Dexia, Belgium’s biggest bank, infusing it with billions in taxpayer money after it became the first casualty of the Greek sovereign debt crisis.
The move came as Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France acknowledged that Europe’s banks still needed billions of euros more to cushion against a possible Greek default. In meetings Sunday in Berlin, they announced that they would have a “comprehensive solution” by the time leaders of the G-20 group of nations meets in early November in Cannes, France.
“We are determined to do what is necessary to guarantee the recapitalization of our banks,” Mrs. Merkel said.
THIS MAY ASSUAGE MARKETS, BUT ONLY TEMPORARILY: YOU CANNOT SOLVE THE SOVEREIGN DEBT CRISIS WITH MORE SOVEREIGN DEBT.
AND NATIONALIZING A PRIVATE BANK'S DEBTS DOES JUST THAT.
THIS IS JUST SUBSTITUTING ONE'S NATION'S CURRENT DEBT PROBLEM WITH ANOTHER NATION'S FUTURE DEBT PROBLEM.
EVENTUALLY THIS WILL FAIL THE WAY SOCIALISM ALWAYS DOES - WHEN YOU RUN OUT OF OTHER PEOPLE'S MONEY.
RIGHT NOW - ON THIS DEAL - THE MONEY IS COMING FROM FRANCE AND BELGIUM.
BUT WHEN GERMANS ARE ASKED TO PONY UP EVEN MORE TO BAIL OUT BANKS IN LESS HARD-WORKING AND LESS PRODUCTIVE WELFARE STATE ECONOMIES, THEY WILL RIGHTLY SAY NEIN!
AND THE HOUSE OF CARDS WILL COLLAPSE.
AS A MATTER OF FACT, I THINK THAT - AT THE VERY NEXT OPPORTUNITY - FRANCE'S AND BELGIUM'S SOVEREIGN DEBT RATING WILL BE DOWNGRADED AS A RESULT OF THIS VERY ACTIONS.
THIS MIGHT HAPPEN AS SOON AS THE MARKETS ACCEPT THE FACT THAT FRANCE'S SOCGEN AND BNP ARE ALSO FAILING. SOMETHING THEY DENY - NOW...