08:36 – The Euro crisis is now in the end game, with everything worse than it was just before the crisis summit at the end of last month. Italian and Spanish bond yields have hit record highs, remaining above 6% all week. The Spanish government is on the way out, with early elections called for November, which is much too late to matter. Spain will have defaulted before the new government is even elected. Italy is on the verge of requesting a gigantic bailout, which the ESFS has neither the authority nor the means to grant. And tomorrow Spain will auction more of its worthless bonds, with the yields expected to be even more disastrous than those of the last couple of weeks. Meanwhile, tiny Cyprus is the latest EU country to join the Bailout Brigade, mainly because it was foolish enough to hold a lot of Greek bonds. Well, that, and the fact that it accidentally blew up its only electric power plant by improperly storing tons of explosives right next to it. Talk about shooting themselves in the foot.
Someone asked me why I keep harping on bond yields. It’s simple. The US currently pays about $200 billion per year in interest on its debt. Italy, whose population is about a fifth that of the US and whose debt is approaching $3 trillion (120%+ of GDP), has huge amounts of debt coming due in the near future. If Italy had to roll over all of that debt at current bond yields, it would be paying about the same dollar amount per year on its debt as the US is paying on its debt. In other words, at $200 billion per year, US interest payments amount to about $660 per year for every man, woman, and child. At the same level, Italian interest payments would amount to about $3,300 per year for every Italian man, woman, and child. Now, of course, not all of that debt is due to roll over soon, but enough of it is that the increased interest payments that would be required at current bond yields are sufficient to bankrupt Italy.
The Spanish situation is a bit different. Spain has a much lower debt load than Italy, but Spain also has structural unemployment that’s optimistically stated to be 21%. In reality, of course, it’s much higher, particularly among young Spaniards. So Spain suffers a double whammy. All those unemployed people aren’t earning salaries and paying taxes, and all of them require social spending, which further hammers the poor Spanish treasury. And Spain, like Italy, can no longer borrow on the open markets because no one wants its bonds.
09:17 – This article, which focuses on one young formerly middle-class Greek family, makes clear how bad things have already gotten in Greece. The husband is a mechanical engineer who considers himself lucky to have occasional work picking fruit for €29.45 a day. His wife, a chemical engineer, finds occasional work selling toilets and flowers. They can’t afford to pay the rental for an apartment, so they’ve moved into his parents’ apartment, displacing his parents to the vacant shop next door. Even getting enough to eat is a problem. And they consider themselves lucky, because they’re in better shape than most. Greece is already well on its way to joining the third world, and it’s only going to get worse.
10:14 – As my regular readers know, I consider same-sex marriage to be a basic human right. The religious nutters would have us believe that allowing same-sex marriage would inevitably destroy society. Well, here are two married lesbians, Hege Dalen and Toril Hansen, who are rightly being acclaimed heroines in Norway. While the police dithered, these women took immediate action at severe risk to their own lives to rescue 40 of the kids on the island. They were having dinner on the mainland when they heard shooting and screams from the youth camp on the island. Most people would have called the police and considered their duty done. Not these women. They hopped in their boat, roared out to the island, and took a boatload of kids to safety. Despite the fact that their boat now had bullet holes in it, they returned to the island four more times, under fire, to haul off additional loads of kids.
If these women had been members of the US military, their actions would almost certainly have earned them the Medal of Honor, and would have made the front pages across the planet. As it is, this morning was the first I’d heard of it. Gay advocates are claiming, with apparent justification, that these women’s heroism has been downplayed because they’re gay. Well, to those who condemn gays and same-sex marriage, all I can say is fuck you and the horse you rode in on.