This is probably one of the best pieces of analytical commentary we have yet read on the eurozone situation

- This is probably one of the best pieces of analytical commentary we have yet read on the eurozone situation, skrev Eurointelligence.

Its official – Spain and Portugal will need to be bailed out soon.  How do I know?

In one of my favorite TV shows, Yes Minister, the all-knowing civil servant Sir Humphrey explains to cabinet minister Jim Hacker that you can never be certain that something will happen until the government denies it, skrev Michael Petis 24/11 2010.

“Absolutely not,” said Elena Salgado, Spanish finance minister, when asked in a radio interview on Monday whether Spain needed help from the European Union. “Spain is doing everything it has promised to do, with tangible results.”

Petis skriver:

- I think it is pretty safe to make the following predictions:

1. Greece will be forced to default and restructure its debt, and the restructuring will come with a significant amount of debt forgiveness.  The idea that it can grow its way out of the current debt burden is a fantasy.

Det påminner mig om när jag skrattade ut Gredklands fd Riksgäldschef på ett möte med fina farbröder hos SNS.

2. Spain, Portugal, Ireland, Italy, Belgium and much of Eastern Europe will also face severe financial distress and possible default.

3. Political radicalism in these countries will rise inexorably as a consequence of rising class conflict.

4. So why not bite the bullet and just get it over with?  Because the European banking system would not survive even the best-case restructuring scenario.

5. Several countries, most notably Spain, will be forced to choose between giving up sovereignty to Germany, suffering extremely high rates of unemployment for several years, or giving up the euro.

Hans slutsats blir fölljande:

- This has been said before, but in a way this crisis is the European equivalence of the American Civil War.  

- Once the dust finally settles Europe will either be a unified country with fiscal sovereignty firmly established in Berlin or Brussels, or it will be fragmented with little chance of reunion.

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