There are two forthcoming dates which will set the direction and strength of the tide and certainly have a marked affect upon the ventures. They are this Sunday, May 6, when both the French and Greek populace will decide on who is running their government and then on May 31 when the Irish have their referendum. At the least one must be thankful that there are Democracies that are working and that no group of Generals or some thug is making the decisions. I did watch the one French Presidential debate this morning. It seemed rather like something out of Harry Potter where Professor Dumbeldore was ranting and raving with the Minister of Magic. If events go the way as predicted by the polls then we will have a Socialist President in France that will be followed in June by some right wing members of Parliament also being elected. Vive la France at the national level but a major thunderstorm coming for the European Union as Germany finds herself ever isolated from the demands of France, Spain, Portugal, Italy et al. Germany, in my view, is about to lose her position as the Dictator of the EU and there will be consequences which, I am certain, will cause moments of great angst in Berlin. Forthcoming I visualize many Socialist demands such as Eurobonds being made and Germany standing alone in the corner and refusing to fund which will make for all kinds of volatile markets.
“The Charges to the accused are as follows: that he did willingly, and in the full knowledge of the illegality of his actions, perform a Patronus Charm in the presence of a Muggle.”
-The Minister of Magic
The elections in Greece are of a different sort. You may as well throw up the cards into the wind and see which way it is blowing. In the end, though, I think it all comes down to money. The Greeks will bumble along while the EU foots the bill and the moment the spigot is turned off; Bye Bye Birdie. I can almost hear the screams and cries in Paris and Berlin as the Greeks return to the Drachma and default on their debts but it is either a continuing flow of cash or the end of Greece’s tenure I am afraid. The bigger crisis though, I fear, will be when Germany says no to funding some grand Socialist idea. The problem is the size of the economy. The German economy is 25% of the American economy and it is going to get down to a matter of capital and what Germany can afford without being downgraded and a European Union without a AAA rated Germany is a very different affair both for the EU’s debt structure and for the Euro. Therefore it will get down to push/shove, hide/seek and various other games of our childhood which will mark the Eurozone for the balance of the year. The tipping point may well be Spain as there just is not enough capital to rescue her and there is just no escaping the fact that Spain will need help.