Irish vote yes but Euro project remains in dire trouble
Billions leaving Spain, Greece and Italy as investors flee
This vote brings a degree of stability to Irish finances but unfortunately it may be too little too late as it looks like the Euro project in general is in trouble and may not survive. The game has moved on and it is moving fast.
Capital is fleeing out of Greece and Italy and Spain. Yesterday the Spanish government alone announced that 100 Billion Euros has left the country in recent months. This is not good. It means that the Trillion Euros of support given to European banks by the European Central Bank is not being used to promote investment but is in fact targeted to bail out banks suffering from capital flight. To put it simply there is a run on European banks. This is why Swiss banks have introduced capital controls on Euro accounts wishing to switch into Swiss Franc accounts. Will The American Fed be the next to introduce such controls in an effort to support the Euro and discourage such panic?
In another strange twist of the unending "Euroblown" saga, Germans have started to check their Euros. Any Euro note with a Greek "Y" designation (All Euro notes have a letter indicating which European Central banks issued it) is being handed back in exchange for a Euro with a German "X" designation. Will the same thing start to happen with Irish, Portuguese, Italian and Spanish Euros? Will foreign banks soon adopt the same policy? If so the Euro project is "dead in the water" despite today's Irish referendum victory.
Switching the focus to Athens it looks like the anti-bailout party is going to win and this will have serious consequences for European monetary stability. If fact Greek society is falling apart and it is hard to see how the European Union can survive when it allows such social disintegration to take hold. Below I quote stories of real Greek people who were interviewed by CNN to give a flavour of what they are going through:
47, neurosurgeon from Athens
"There is a big increase in suicide levels and traffic accidents, also in people with heart and psychological problems. So there's more diseases caused by the public crisis, as well as difficulties for a big part of the population getting access to health services. The biggest problem for us is there's a shortage of medical personnel. Older personnel are retiring but they're not being replaced."
37, architect/Web designer
"Luckily, I'm not unemployed and haven't been forced to emigrate, as has happened with half of my friends. I don't have any children so I don't have to bear the double and triple burden of responsibilities that would increase with the abolition of the welfare state. Luckily, I don't have a mortgage loan. "But beyond that, I've gained social and political consciousness that had been in hibernation until now. I've realized that society does not mean economy - that this system is doomed even if we and our grandchildren pay forever. I've learned that the planet is polluted by this circulating financial, toxic mess that arrogantly demands to consume entire countries and culture, that our politicians are weaklings and Europe has suddenly become captive of the banks and a global oligarchy, and that power does not have morality or imagination."
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