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When Will the EU Be Honest with Itself?

Posted by Larry Doyle on October 24, 2011 8:23 AM |

What does the future hold for the economies within the European Union and by extension the global economic landscape?

I have not written much about the situation within the EU over the last few months for the very simple reason that I have no trust or confidence in the parties involved. Do you?

Over the last few years we have witnessed various and sundry charades by private and public European entities to determine a path forward.

What has been a consistent theme within the charades played out on market participants?  A lack of meaningful transparency and integrity in dealing with the overall debt burden within selected EU nations and the value of sovereign bonds held by European banks. Time and again plans laid out by individual nations and the EU as a whole have fallen far short on both these fronts.

Once again we see just today an acknowledgment by the EU that the grand plans laid out this past summer were woefully insufficient.  The Wall Street Journal highlights this reality in writing, European Leaders Debate Severe Options for Accord,

European leaders took their first steps toward a new plan to stem the euro crisis, admitting that their last grand plan, agreed to only three months ago, has failed.

The new effort, which leaders hope to finalize at another summit on Wednesday, involves a sweeping recapitalization of European banks, a substantial restructuring of Greece’s debts, a bigger bailout fund, and even possibly fresh efforts to entice sovereign-wealth funds in China and elsewhere to come to Europe’s aid.

European leaders said at a summit on Sunday in Brussels they are confident that they will find a definitive solution to the European financial crisis but that there is still work to do.

The package remained in flux Sunday, and lower-level officials will toil on it for two more days before leaders reconvene this week. Euro-zone leaders insisted that a deal would be done on Wednesday, and that there was no more time to be lost, after months of delay and denial.

Months of delay and denial? Try years if not decades. Now the charlatans in Europe with prodding certainly from their counterparts elsewhere are going to get this done within the next two days? Challenge!!

The one consistent theme at play within the EU over the last few years and truthfully much longer than that is a lack of full and honest cooperation and honesty amongst nations. This reality has been a central tendency within the EU literally from its founding fifty plus years ago.

Where is this all headed? More and more economists project a likely recession within the EU, not that I believe it ever came out of recession from a few years ago.

Beyond that, there are already strong signs of a new round of quantitative easing emanating from Ben Bernanke and his cronies within the Federal Reserve. The question begs whether Ben and the boys and girls would actually provide another backdoor bailout of selected European financial institutions overwhelmed by holdings of Greek and other sovereign debt.

Who is keeping an eye on the Fed these days? How would we learn if the Fed actually did provide this backdoor bailout?

The more things change, the more they stay the same.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

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