Europe

Nigel Farage: Van Rompuy, Barroso worst people in EU since 1945

After a tough night of wrangling, EU leaders have agreed to set up a new authority - tasked with keeping sinking banks afloat. And to do that, the new agency will be given access to Europe's mammoth bailout funds - stocked in a large part by taxpayer money. This exact function was previously carried out by governments. But now, the EU can bailout a nation's banks - without adding to the government's debt levels - at least on the books. It's something that Germany strongly opposed, but was forced to relent on due to Spanish and Italian insistence. 


Nigel Farage, a member of the European Parliament and leader of the UK Independence Party, believes that it's Germany who plays the deciding role in these talks...

Zombie markets high on bath salts: 

the Extinction Protocol,29 June, 2012

The benefits of the announcements (lower yields on sovereign bonds and higher share prices in EU banks) will be short-lived.

None of these decisions from the EU summit address the core issues facing the EU banking system: namely, insolvency and excessive leverage.

No one in the EU actually has the money to make these measures work (again, Spain and Italy will provide 30% of the ESM’s funding). Markets will stage a knee jerk reaction to these measures.

That reaction will see bank shares rise and yields fall, temporarily. But this move will be short-lived, just as moves following LTRO1 and LTRO 2 were.

After all, these announcements are just more political measures than anything else.

And Europe needs capital NOT politics at this point. So I would expect this rally and the drop in bonds to be short-lived. EU leaders may have put off the Crisis by a few weeks (or perhaps even a month). But they still haven’t addressed the core issues causing the Crisis: excess leverage courtesy of hundreds of billions of Euros’ worth of garbage debt.

–Zero Hedge – Phoenix Capital