Hands up! This is a rescue!

11/06/2012

Hollande was on track for a Socialist-led majority in parliament after a solid win in the first-round voting yesterday, says Reuters. He looks likely to win the 289 seats needed for an outright majority in the 577-seat National Assembly in next Sunday's run-off, and is almost certain to do so with his Green Party allies.

Such a victory should free him from having to rely on hard leftists hostile to European integration, and enable him to meet Merkel more than half-way. In the manner of European politicians, we can expect him now to ignore his election promises and get down to the business of handing more powers to "Europe".

Meanwhile, Reuters is also reporting that the Spanish rescue plan may afford only a short-lived relief for the euro. Not least of the problems is a £82.5 billion refinancing requirement by the end of the year, with a further $15.7 billion maturing in the regions.

Add to this the continuing problem of capital flight, which seems to be one the major problems of the stricken eurozone economies, and we have Jose Carlos Diez, chief economist at Intermoney in Madrid, saying on Spanish television, "We're very close to junk bonds and we'll end up in the junk".

If that isn't bad enough, europhile Wolfgang Münchau in the Financial Times is declaring that, if the "colleagues" fudge the march to the banking union and then a wider fiscal and political union, he too "would conclude that it is time to prepare for the end of the eurozone".

Bizarrely, he states that "such a process would probably take several months, and may not be ready until December", thereby offering a timescale which is so wildly optimistic that there cannot be even the remotest chance of it being achieved.

If Münchau is thus relying on political union being "ready" by December, then he will be disappointed, and we had better prepare for the end of the eurozone.

The Spanish protestor, incidentally, is holding up a sign saying: "Hands up! This is a rescue!" In truth, it isn't even that – just a short delay in the inevitable.

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