Everything Has A Limit

The newspapers this morning are full of "Spain will be the trigger point" stuff, with nearly all commentators stating that the euro might well not survive a Spanish bond meltdown. But the thing is, the meltdown is already happening. Spain's three-month borrowing requirements are soaring. Governments have implicitly assumed that the capital markets will always be available to them, but the capital markets aren't charities put in place solely to ensure that governments will always be able to raise cash. That lesson should have been learnt 800 years ago. The eurozone and the IMF and the markets are eventually going to stop bowing to the holy grail that no senio bondholder should suffer any loss. FFS, taxpayers and consumers are getting it up the arse -- bondholders should be told that their threats no longer hold water and they can go fuck themselves. That will happen when the euro falls apart. And the statements that this will make it impossible for the "new" economies (let's call it Ireland 2012 plc) to get funding from the markets is bollocks. However, on the downside, any credit that is provided will not be as cheap as it once was. And there's the rub. This is about governments that not only assumed that credit would always be available, but that cheap credit would always be available.

PJ