Will there be an EU Armada to secure the Spanish conquest of Gibraltar?

An EU Armada off the coast of Gibraltar?
(image by Wikipedia)

Breaking news:

BREXIT THREAT: Spain will ‘take control of Gibraltar as soon as Britain leaves EU’

SPANISH officials have sent a chilling warning to Britain after claiming they will take Gibraltar the day after Britain potentially exits the European Union.

The country's Foreign Minister said his country will poach the British outpost “the very next day” but the comments have been condemned in the UK.

The big question is now, whether there will be an EU Armada off the coast of Gibraltar to secure the expected Spanish conquest of Gibraltar after Brexit? Members of the club are required to give a helping hand, should there be a need. We certainly live in exciting times ....

Spain is again showing the way for the wind energy industry - without huge subsidies it ceases to exist

Spain, the former international "star" of wind energy, is now the the best example of what happens to an industry that is totally dependent on huge taxpayer subsidies:

Wearing face masks and wielding sanders, two workers smooth the surface of a massive fan for a wind turbine at the Gamesa factory in Aoiz, a town in Navarre, northern Spain.
But in hard times, it will be winds in Finland, not Spain, that make the finished product spin.
Last year, the plant delivered a wind turbine park to Malaga in southern Spain and another to Burgos, in the north, said factory manager Javier Trapiella.
"Now we don't produce for Spain," he added.
"It has all stopped."
For green energy producers, Spain has changed from a paradise with generous public support to a markedly less agreeable home.
Prime Minister Mariano Rajoy's conservative government is imposing an austerity regime to plug an accumulated energy sector deficit of 26 billion euros ($34 billion).
On Friday, the horizon darkened further with the approval of reforms cutting annual state aid for renewable energies by more than one billion euros.


Read the entire article here

The Spanish wind lobby is of course whining, but the taxpayers are grateful. Now it is up to the Rajoy government to stop the remaining wasteful subsidies. 

Spain is again showing the way for the wind industry ....

Unemployment - the only sector in the eurozone and the EU with strong growth

These people are the ones who should be held accountable for the record unemployment and recession  in the EU.

"Our economic fundamentals remain strong"
EU Commission president J.M. Barroso (speech in New York, April 12 2013)

The only thing that is growing fast in the eurozone (and basically in the entire EU) is unemployment. Today official eurozone enemployment hit a new high: 12,1% - 19.2 million people - are on the dole. In the full 27-member EU, a total of 26.5 million (10.9%) people were out of work in March.

The Eurostat data show a dramatic year-on-year rise; a year before the eurozone unemployment was 11% and 10.3% for the entire EU. 

Greece (27.2%) and Spain (26.7 %) were the hardest hit. 

You could be forgiven for thinking that it could not possibly be much worse. But, as economist Andrew Watt (Germany's Macroeconomic Policy Institute), shows us, you would be wrong: 

"we can make a rough and ready calculation of the “real” rate of underemployment in Europe. According to the European Labour Force Survey, average hours of part-timers are a tick under twenty per week, whereas full-timers work 41.5 hours a week. We don’t know exactly how the working time preferences are distributed, but a reasonable starting point would seem to be to assume that those part-timers wanting longer hours have the same average hours as all part-timers and that they want to move to the average of full-timers. In  other words we add somewhat more than half of the 9.2 million involuntarily part-time workers to the unemployed total.** We then add the people in the two sub-groups of the economically inactive both to the numerator (unemployed) and denominator (unemployed plus employed).

If I haven’t made any stupid excel mistakes*** the underemployment rate in the EU27 could be considered to be up to 16.7% and in the euro area as high as 18.0%. In other words the unemployment rate captures only about two-thirds of the extent of European underemployment."

PS
It is of course possible that I have misunderstood what Barroso said. He may actually be right when he states that "our economic fundamentals remain strong" - if he meant to say that his own and the other commissioners' economic fundamentals remain strong. 

Latest EU poll: "Euroscepticism is soaring amid bailouts and spending cuts"

The latest European poll should make the pygmy politicians and Brussels eurocrats in charge of the slow motion train wreck known as the European Union scared to death: 

Public confidence in the European Union has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the union's worst ever crisis, new data shows.

After financial, currency and debt crises, wrenching budget and spending cuts, rich nations' bailouts of the poor, and surrenders of sovereign powers over policymaking to international technocrats, Euroscepticism is soaring to a degree that is likely to feed populist anti-EU politics and frustrate European leaders' efforts to arrest the collapse in support for their project.

Figures from Eurobarometer, the EU's polling organisation, analysed by the European Council on Foreign Relations (ECFR), a thinktank, show a vertiginous decline in trust in the EU in countries such as Spain,Germany and Italy that are historically very pro-European.

The six countries surveyed – Germany, France, Britain, Italy, Spain, and Poland – are the EU's biggest, jointly making up more than two out of three EU citizens or around 350 million of the EU's 500 million population.

The findings, published exclusively in the Guardian in Britain and in collaboration with other leading newspapers in the other five countries, represent a nightmare for Europe's leaders, whether in the wealthy north or in the bailout-battered south, suggesting a much bigger crisis of political and democratic legitimacy. 

"The damage is so deep that it does not matter whether you come from a creditor, debtor country, euro would-be member or the UK: everybody is worse off," said José Ignacio Torreblanca, head of the ECFR's Madrid office. "Citizens now think that their national democracy is being subverted by the way the euro crisis is conducted." --

The most dramatic fall in faith in the EU has occurred in Spain, where the banking and housing market collapse, eurozone bailout and runaway unemployment have combined to produce 72% "tending not to trust" the EU, with only 20% "tending to trust".

The data compares trust and mistrust in the EU at the end of last year with levels in 2007, before the financial crisis, to reveal a precipitate fall in support for the EU of the kind that is common in Britain but is much more rarely seen on the continent.

In Spain, trust in the EU fell from 65% to 20% over the five-year period while mistrust soared to 72% from 23%.

In five of the six countries, including Britain, mistrust prevailed over trust by sizeable margins, whereas in 2007 – with the exception of the UK – the opposite was the case.

Five years ago, 56% of Germans "tended to trust" the EU, whereas 59% now "tend to mistrust". In France, mistrust has risen from 41% to 56%. In Italy, where public confidence in Europe has traditionally been higher than in the national political class, mistrust of the EU has almost doubled from 28% to 53%.

The failure of the present European Union is becoming more apparent day by day. The co-founder of the Danish Saxo Bank, Lars Seier Christensen, has some interesting ideas about what could be done to stop the madness:

The big question raised in the book (by Vaclav Klaus) is really whether the EU is more the problem than the solution in the current crisis.

Both the EU and Denmark are in a difficult situation. The euro has shown its true colours and anyone with a rational view of the world sees the currency collaboration as a historic failure that can lead to even further fatal consequences for Europe and the continent’s competitiveness vis-à-vis the rest of the world. There is one thing, and only one thing, that can rescue the euro. That is a much more far-reaching integration between the euro countries; a common financial policy, joint debt issuing, a willingness to pay enormous transfers from the rich to the poor countries or, more specifically, from Germany to all the other member states.

That is a possible route, but not a desirable one. At least not for the citizens who in this case - like in too many other cases - seem to have fundamentally different interests than politicians. It requires a will to give up national independence to an extent that is not acceptable to the voters and, precisely because of this, can only be accomplished in an undemocratic manner.

A speech by British Prime Minister David Cameron on January 23 was extraordinarily important. It represented a strengthening of the critical debate that many Europeans are striving for. Until this moment, Václav Klaus was the only head of state who contributed to that debate. The fact that the prime minister of one of the EU’s most important countries is stepping forward as the focal point for citizens who want a different EU can turn out to be extremely important, although the initial reactions from the EU elite were as negative as they were predictable. The EU does not take criticism and debate lightly.

But with the UK’s forthcoming attempt to negotiate a less restrictive agreement with the EU, Pandora’s box has now been opened. Cameron’s rational reasoning will contribute to exposing the EU’s rigid insistence on more power despite the poor results. It will become increasingly difficult for both the Brits and other EU citizens to understand a firm rejection of Cameron’s five principles – competitiveness, flexibility, more power to the national states, democratic responsibility and fairness. That the EU will have to argue against such reasonable demands and as strongly as possible try to prevent referendums about them would only create more attention and more criticism not least because the Eurozone will come under further economic pressure as a possible referendum would be approaching in the UK in 2017.

It is a unique chance for the countries outside the Eurozone to create an independent forum chaired by Cameron. The Danish Prime Minister ought to have been on the first flight to London to discuss this. It did not happen, of course, but the hope for a better EU has been strengthened by Cameron’s newfound leadership.

Grillo's success a blessing in diguise: "Europe's Lost Generation Finds Its Voice"

As I tried to explain in an earlier post, the result of Italy's recent parliamentary election could actually be a blessing in disquise. Now German Der Spiegel seems to have come to a similar conclusion:

For years, Europe's young have grown increasingly furious as the euro crisis has robbed them of a future. The emergence of Beppe Grillo's party in Italy is one of the results -- and is just the latest indication that disgust towards European politics is widespread

Grillo is an Italian phenomenon, but his party's election results are an expression of the mounting rage and anxiety that is spreading throughout crisis-stricken Southern Europe. A new citizens' movement is taking shape, one that shares a mistrust of the established political system and a desire for more grassroots democracy. Only in Italy has it been democratically legitimized thus far.

These irate citizens are also united in anger against their own elite: politicians who have been tainted by party scandals and corruption, yet still remain in power or leaders who are seen as being the mere lackeys of Germany and Chancellor Angela Merkel.

Despite its name, Movimento 5 Stelle has long since ceased to be a movement. It has become a political party that is expected to take responsibility and make proposals for the formation of a government. During the campaign, it relied on a thin, 15-page platform.

The Grillini now have to prove that their country is not merely corrupt, indifferent and infiltrated by the Mafia. Ultimately, they could save Italy's image around the globe. They are the latest example of an uprising of the lost generation, that mass of people on Europe's periphery who are under the age of 40, desperate, unemployed and who have very little left to lose. The public outrage in Europe came to a boil in tent camps in Madrid's Puerta del Sol. It inspired the Occupy Wall Street activists. And it continued in Greece, where youth unemployment has reached 59.4 percent, and where there are no jobs and no economic recovery. =

Yet whereas the Greeks have not yet stirred up the old political system, the Grillini have found unexpected success. They were long underestimated in Italy, yet they long ago started having an effect. They have, for example, fundamentally shaken up the old party system, with its irreconcilable right-wing and left-wing factions. A new political class has emerged with them. Since the advent of the Grillini, Italians are debating Europe more than ever before, including their country's possible exit from the euro zone.

It must be terrifying for current bunch of European political leaders and Brussels eurocrats to watch the mounting anger, not only in southern Europe, but in other regions as well. In their hearts they must know that they have utterly failed, and that the day of reckoning cannot be far. 

Sicily's traditional family businesses join the renewable energy revolution

Al Gore, Greenpeace, WWF and all the other environmentalists have been joined by a number of leading Italian family businesses in the fight against human caused global warming:

authorities swept across Sicily last month in the latest wave of sting operations revealing years of deep infiltration into the renewable energy sector by Italy’s rapidly modernizing crime families.

The still-emerging links of the mafia to the once-booming wind and solar sector here are raising fresh questions about the use of government subsidies to fuel a shift toward cleaner energies, with critics claiming huge state incentives created excessive profits for companies and a market bubble ripe for fraud. China-based Suntech, the world’s largest solar panel maker, last month said it would need to restate more than two years of financial results because of allegedly fake capital put up to finance new plants in Italy. The discoveries here also follow so-called “eco-corruption” cases in Spain, where a number of companies stand accused of illegally tapping state aid.

Roughly a third of the island’s 30 wind farms — along with several solar power plants — have been seized by authorities. Officials have frozen more than $2 billion in assets and arrested a dozen alleged crime bosses; corrupt local councilors and mafia-linked entrepreneurs. Italian prosecutors are now investigating suspected mafia involvement in renewable energy projects from Sardinia to Apulia.

“The Cosa Nostra is adapting, acquiring more advanced knowledge in new areas like renewable energy that have become more profitable because of government subsidies,” said Teresa Maria Principato, the deputy prosecutor in charge of Palermo’s Anti-Mafia Squad, whose headquarters here are emblazoned with the images of assassinated judges. “It is casting a shadow over our renewables industry.”

Read the entire article here

Desertec - another major solar energy project loosing its shine

Desertec - a green pipe dream soon to be deserted.

Another major solar energy project is going down the drain:

As recently as three years ago, many thought that it was only a matter of time before solar thermal plants in North Africa supplied a significant portion of Europe's energy needs. But Desertec has hit a road block. Industrial backers are jumping ship, political will is tepid and a key pilot project has suddenly stalled.

Supporters hailed the Desertec Industrial Initiative as the most ambitious solar energy project ever when it was founded in 2009. Major industrial backers pledged active involvement, politicians saw a win-win proposition and environmentalists fawned over Europe's green energy future. For a projected budget of €400 billion ($560 billion), the venture was to pipe clean solar power from the Sahara Desert through a Mediterranean super-grid to energy-hungry European countries.

Today, a scant three years later, there is still little to show for the project but the ambition.

The list of recent setbacks in daunting. The project has failed to break ground on a single power plant. Spain recently balked at signing a declaration of intent to connect high-voltage lines between Morocco and the rest of Europe. In recent weeks, two of the biggest industrial supporters at the founding of the initiative, Siemens and Bosch, backed out. And perhaps most tellingly, though last week's third annual Desertec conference was held in Berlin's Foreign Ministry, not a single German cabinet minister bothered to attend.

The reasons for the impending failure are clear:

Renewable energy projects remain more expensive than traditional fossil fuel plants and tend to require government subsidies.

-

"The rarest resource in Europe is money," said Michael Kauch, a German parliamentarian who is the environmental spokesman of the business friendly Free Democratic Party. "It's even rarer than energy or rare earth minerals."

The same story everywhere: Solar and wind energy projects, which totally rely on government subsidies, are failing abysmally. There is more than enough of clean and inexpensive shale oil and gas  for the foreseeable future. Why waste taxpayers' money on expensive and completely unrealistic "renewable" energy projects. 

The euro is doomed

Greece is on its way out:

Greece has fallen behind with its budget cuts and is asking lenders for more time to meet the conditions of the 130 billion euro aid package. But that would require fresh help of up to 50 billion euros, SPIEGEL has learned. Neither Berlin nor the IMF are prepared to make that money available.

Germany and other important international creditors are not prepared to extend further loans to Greece beyond what has already been agreed, German newspaper Süddeutsche Zeitung reported on Monday. In addition, SPIEGEL has learned that the International Monetary Fund (IMF) too has signalled it won't take part in any additional financing for Greece.

The Süddeutsche Zeitung cited an unnamed German government source as saying it was "inconceivable that Chancellor Angela Merkel would again ask German parliament for approval for a third Greece bailout package."

Merkel has had difficulty uniting her center-right coalition behind recent bailout decisions in parliamentary votes and would be unwilling to risk a rebellion in a another rescue for Greece, the newspaper reported.

Meanwhile, German Economy Minister Philipp Rösler said on Sunday he was "more than skeptical" that Greece's reform efforts will succeed. "If Greece no longer meets its requirements there can be no further payments," he said in an interview with German public broadcaster ARD. "For me, a Greek exit has long since lost its horrors."

Spain is also teetering on the brink, and Slovenia is fast becoming a bail-out candidate ...

The euro in its present form is doomed. It will remain in the history books as an example of monumental political and economic failure. 

The eurozone on the brink: Spain asks for invitation to beggars´ banquet

Spain has now declared that it will join the not anymore so exclusive club of eurozone beggars: 
Spain indicated during a conference call of the euro zone's 17 financeministers that it wanted aid for its banks but would not specify the amount until two independent consultants deliver their assessment of the capital needs some time before June 21.

Roger C. Altman, chairman of Evercore Partners and former deputy Treasury secretary under President Clinton from 1993 to 1994 describes the dire situation for the entire eurozone:

Europe is on the verge of financial chaos. Global capital markets, now the most powerful force on earth, are rapidly losing confidence in the financial coherence of the 17-nation euro zone. A market implosion there, like that triggered by Lehman Brothers collapse in 2008, may not be far off. Not only would that dismantle the euro zone, but it could also usher in another global economic slump: in effect, a second leg of the Great Recession, analogous to that of 1937.

This risk is evident in the structure of global interest rates. At one level, U.S. Treasury bonds are now carrying the lowest yields in history, as gigantic sums of money seek a safe haven from this crisis. At another level, the weaker euro-zone countries, such as Spain and Italy, are paying stratospheric rates because investors are increasingly questioning their solvency. And there’s Greece, whose even higher rates signify its bankrupt condition. In addition, larger businesses and wealthy individuals are moving all of their cash and securities out of banks in these weakening countries. This undermines their financial systems.

PS
It should again be stressed that the euro crisis is entirely self afflicted. The politicians - among them Germany´s Helmut Kohl - who created the common currency, against the advice of most economists are the ones to be blamed.

The destructive power of the failed euro project hits Spain

The destructive power of the failed euro project is hitting Spain with full force. The once so proud kingdom is according to news reports going to beg for rescue money from Brussels tomorrow. But the question remains,  whether there will be enough money to bail out the Spanish banks:

While the International Monetary Fund thinks Spanish banks require €40bn or so in fresh capital, any loan package may have to be much larger to restore shattered confidence in the country.

Megan Greene from Roubini Global Economics says Spain's banks will need up to €250bn, a claim that no longer looks extreme. New troubles are emerging daily. The Bank of Spain said on Thursday that Catalunya Caixa and Novagalicia will need a total of €9bn in new state funds.

JP Morgan is expecting the final package for Spain to rise above €350bn, while RBS says the rescue will "morph" into a full-blown rescue of €370bn to €450bn over time -- by far the largest in world history.

"Where is the money going to come from?" said Simon Derrick from BNY Mellon. "Half-measures are not going to work at this stage and it is not clear that the funding is available."

Read the entire article here

What makes the case of Spain so sad, is that Spain´s poor people will  be the ones who are going to suffer most of the euro madness - and there are many of them. Few people outside of Spain know that among the EU countries only Romania and Latvia have a higher poverty rate than Spain: 

The study commissioned by the Spanish Roman Catholic Church charity organisation, draws attention to the danger facing 11 million people who could fall below the poverty threshold, while confirming that there are around 30.000 homeless people across the country.


Among the findings in the report ‘Exclusion and Social Development 2012’ was pusblished this week by Caritas Spain it states that already 22% of Spanish households are living under the poverty line with a further 30% facing serious difficulties in making ends meet at the end of the month and 580.000 Spaniards, nearly 3.3% of the population, receiving no income whatsoever.


“There are more poor people than last year, and they are poorer. After four years of financial hardship poverty is more widespread, more intense and it is creating a polarised society in which the difference between rich and poor is growing,” said Caritas Secretary Mora.


Spain is among the European countries with the highest poverty rates, totalling up to 21.8% of the population -- over the EU average of 16.4%. Only Romania and Latvia rank before Spain in the list.

Spain: Adiós to the euro?

The euro endgame is coming closer. The exit of Greece is nothing compared to what will happen if/when Spain is forced to leave the common currency: 

Spain is in the gravest danger since the end of the Franco dictatorship as it is frozen out of capital markets and slides towards a showdown with Europe.

"We're in a situation of total emergency, the worst crisis we have ever lived through" said ex-premier Felipe Gonzalez, the country's elder statesman.

The warning came as yields on Spanish 10-year bonds spiked to 6.7%, pushing the "risk premium" over German Bunds to a post-euro high of 540 basis points.

The IBEX index of stocks in Madrid fell 2.6%, the lowest level since the dotcom bust in 2003.

Chaos over the euros 23.5bn (£18.8bn) rescue of crippled lender Bankia led to the abrupt resignation of central bank governor Miguel Angel Fernandez Ordonez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.

--

Roberts said the collapse in Spanish tax revenues is replicating the pattern in Greece. Fiscal revenues have fallen 4.85 over the past year and VAT returns have slumped 14.6%. Debt service costs have risen by 18%.

The country is caught in a classic deflationary vice: a rising debt burden on a shrinking economic base.

"Once you get into such a negative feedback loop, you can move beyond the point of no return quickly," Roberts said.

Read the entire article here

No reason to celebrate Spanish wind power "record"

The European wind power lobby is celebrating the fact wind turbines in Spain at 1:37 in the early hours of 19 April accounted for 61% of the country´s energy demand:


Last month wind power in Sclpain reached new heights. This extract from the Spanish wind energy association’s (AEE) blog ‘somos eolicos’ highlights what happened…

However, this "achievement" is less than remarkable, when one realises that it happened on a particularly stormy day -  and in the middle of the night, when energy demand is extremely low:

 Iberian benchmark power prices bucked a pre-weekend downtrend in wholesale dealing on Friday as market-moving wind power retreated after setting new records during stormy weather the day before.

Spanish wind parks generated 16,636 megawatts on Thursday, according to national grid operator REE, easily surpassing a previous record of 14,752 MW set on Nov. 9, 2010.

Earlier in the day, wind power accounted for 61 percent of demand In Spain, which typically accounts for 85 percent of volume in the Iberian Electricity Market (Mibel).

Already on the following day the party was over:

By midday on Friday, wind power was down to 11,269 MW, which made costlier coal- and gas-burning plants work harder.


Read the entire article here

Wind power is not going to be a serious energy alternative anywhere. When the wind does not blow - and that happens usually e.g. when it is very cold outside - the turbines produce little or no energy. And in stormy weather they produce too much.  It´s just as simple as that. 

"There is no solution to the euro problem"

Spain is clearly the next big problem in the seemingly never ending euro crisis. Foreign Minister Jose Manuel Garcia-Margallo has admitted that Spain faces a "crisis of huge proportions", with unemployment already at 24% and another downgrade of government debt: 

Unemployment shot up to 24 percent in the first quarter, one of the worst jobless figures in the developed world. Retail sales slumped for the twenty-first consecutive month as a recession cuts into consumer spending.

"The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions," Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.

Standard and Poor's cited risks of an increase in bad loans at Spanish banks and called on Europe to take action to encourage growth.

Read the entire article here

The problem is that there is no solution to the euro crisis, according to Tim Worstall, writing in Forbes. The huge transfers of money to the Southern European countries that would be needed to "save" the euro, are not forthcoming: 

Leave aside the willingness of the European North to make such transfers to the European South. Ponder instead whether it is actually possible. This depends on how much actually needs to be sent south.

We might take at the low end that, what, four or five percent of GDP that is incorporated in the military and health care. Or we might take at the top end the 20 odd percent of GDP that is collected and spent by the federal part of the US Government. Neither of these numbers is right but a useful assumption would be that the necessary fiscal transfers inside Europe would be somewhere between these two numbers that make the US system work.

The thing is though, in northern Europe the government already takes 40-50% of the entire GDP to pay for those lovely welfare states and free health and child care and so on. It’s extremely dubious that there’s room to collect another 5% of GDP to send south and absolutely impossible to imagine another 20% being so sent.

--

As everyone has been saying ever since Robert Mundell wrote on optimal currency areas, to be one requires fiscal transfers. Money raised in tax in rich areas and spent in poor ones. If we use the US as an example of the size of the transfers necessary then we find that the EU simply cannot do this. Not at the required size: for government is already too large to make it possible to collect the necessary taxes.

Thus there is no solution to the euro problem. Or to be more accurate, there is no managed solution: the best that can be hoped for is break up and starting again, however messy and painful that would be while it was actually happening.

The EU´s "Fiscal Treaty" is dead

The Spanish Rebellion has begun, according to Ambrose Evans-Pritchard:

As many readers will already have seen, Premier Mariano Rajoy has refused point blank to comply with the austerity demands of the European Commission and the European Council (hijacked by Merkozy).
Taking what he called a "sovereign decision", he simply announced that he intends to ignore the EU deficit target of 4.4pc of GDP for this year, setting his own target of 5.8pc instead (down from 8.5pc in 2011).
In the twenty years or so that I have been following EU affairs closely, I cannot remember such a bold and open act of defiance by any state. Usually such matters are fudged. Countries stretch the line, but do not actually cross it.
With condign symbolism, Mr Rajoy dropped his bombshell in Brussels after the EU summit, without first notifying the commission or fellow EU leaders. Indeed, he seemed to relish the fact that he was tearing up the rule book and disavowing the whole EU machinery of budgetary control.
He is surely right to seize the initiative. Spain’s economy will contract by 1.7pc this year under his modified plans and unemployment will reach 24pc (or 29pc under the 1990s method of counting). To compound this with manic fiscal tightening – and no offsetting devaluation – is intellectually indefensible.
There comes a point when a democracy can no longer sacrifice its citizens to please reactionary ideologues determined to impose 1930s scorched-earth policies. Ya basta. 

Frau Merkel and the commissars in Brussels must be furious. Mr. Rajoy´s action means that the much hyped "fiscal treaty" is - what it has been from the beginning - just a worthless piece of paper.

Here is the first reaction from Bussels:

Altafaj said Rehn already asked Spain for "clarity" on the figures during talks among eurozone finance ministers last Thursday and is still waiting.
"It's clear we need these hard figures, validated, in order to do a full assessment," he said.
As a eurozone state, Spain risks a cash fine worth between 0.2 percent and 0.5 percent of GDP depending on the severity of the circumstances under new laws meant to tighten budgetary discipline that came into force at the start of the year.
"Once we have clarity," Altafaj said of the detailed figures and analysis wanted in Brussels, "we will do our analysis and make our recommendations.

To think that Spain would pay that kind of  a "cash fine" is, of course, a joke.

The man behind Merkel´s failed energy policy

Now we know why the German energy policy has been such a massive failure. It appears that Angela Merkel has let herself  be guided by Jeremy Rifkin, a Wharton Business School professor who is said to have been Merkel´s adviser for six years.

And no wonder that the "green" Spanish energy policy, with huge subsidies to solar and wind energy also has been a catastrophy - the same Rifkin has also been socialist PM Zapatero´s adviser. In addition Rifkin has, according to Bloomberg, also advised French president Sarkozy and the European Commission, central players in the failed EU energy and climate change policy.

This is how Rifkin now is "advising" Merkel and the other EU leaders:

Angela Merkel won’t allow the euro region to split because she understands that could cause “a dark age” by wrecking the bloc’s energy markets as oil supplies dwindle, said an adviser to the German chancellor.

Europe’s 500 million residents, the wealthiest market on Earth, have led the development of technologies in clean energy, transport and communications that can drive global growth that doesn’t rely on oil, said Jeremy Rifkin, a Wharton Business School professor who has advised Merkel for six years.

Rifkin, in the Spanish capital to speak today at a Rafael del Pino Foundation conference, has advised Merkel, French Premier Nicolas Sarkozy and Spain’s Jose Luis Rodriguez Zapatero that the global economy’s fundamental problem stems from the end of a growth model based on fossil fuels.

Sustainable expansion will only return when officials and executives can produce “the third industrial revolution,” the University of Pennsylvania’s Wharton School professor argues in a book of the same title due to be published next month.
The shift will involve harnessing Internet technology to manage a decentralized network of renewable power generators based in homes and offices, Rifkin said. Domestic hydrogen batteries and computer software will allow consumers to buy and sell power over a smart network, he said.

Read the entire article here

The question is, how long Merkel and co can afford to follow this false prophet. Rifkin´s "third industrial revolution" is - and will remain - a pipe dream for the foreseeable future. Surely nobody who is serious about future global energy needs can take this guy speaking about "domestic hydrogen batteries" seriously.

The sooner Merkel and the other EU leaders find a new energy adviser, the better!

Chinese leaders welcomed with ever deepening bows in Europe

It is not difficult to imagine how pleased even second rank Chinese leaders must feel when visiting crisis-stricken European countries (and also the US). Wherever they go, heads of state, prime ministers and other dignitaries line up in order to have a chance to bow deeply to the new "benefactors". The latest example is Chinese Vice Prime Minister Li Keqiang, who received a royal welcome in the kingdom of Spain.

Of course everybody understands that the good will of China comes with strings attached.(Don´t expect to see Excelentísimo Señor Zapatero embracing the Dalai Lama or expressing support for Chinese dissidents any time soon). However, the economy in some European countries is in such dire straits that political leaders do not seem seem to care, although there is still appears to be some caution regarding arms sales, according to the Christian Science Monitor:

Consensus is still distant, however, especially in regards to an embargo on selling arms to China that Spain and France have lobbied to relax. Washington still strongly opposes relaxing an arms embargo and is also concerned about technological transfers.

For China, however, the juncture is ideal. Struggling European countries that have dragged down the euro and rattled markets are desperate for cash in the form of direct foreign investment. Not surprisingly, Greece, Portugal, and Spain have sought closer relations to Beijing in the aftermath of the economic crisis, and Chinese investment in those countries has soared.

France has been a leader in selling arms to Russia, so it is not surprising to see it lobbying hard for relaxing the arms embargo to China. (By the way, you may remember that France was a leading exporter also to e.g. Saddam´s Iraq). I would not be surprised if France eyes to sell Mistral class power projection war ships also to the Chinese ...

Addendum:
European leaders should perhaps consider using the old court etiquette when approaching visiting Chinese benefactors ( from a manual produced by modauniversity.org):

Approach the Royal Presence (or Chinese high level visitor), along with everyone else who is coming to swear fealty at that time. When you arrive as close as you can get (this will vary depending on the number of participants, bow, then kneel with everyone else swearing fealty.

If you have gotten there first and can use the cushions, do so. However, be courteous - if someone with bad knees needs them, let them have use of the cushions. The court herald will come forward and give you the words to state, giving your oath of fealty.

Once the oath has been given and the Crown has responded, along with everyone else, rise and give a short bow. Then walk briskly back to your seat.

Please note that when in China, the etiquette changes to traditional Chinese kowtowing:

China soon awash in Spanish wine

Spain´s socialist PM José Luis Rodríguez Zapatero is soon expected to announce a string of economic agreements with China, according to a report in The Guardian. In reality this means that the developing nation China is bailing out the once so proud EU member Spain. The Chinese "development aid" to Spain will most likely involve public support for Spanish bonds. China already holds 13% of Spain's debt.

With 4 million unemployed and borrowing costs near eurozone highs, Spain will welcome the multimillion pound Chinese investment, which is likely to include olive oil, ham and wine exports to the world's second-largest economy.

Zhu Bangzao, China's ambassador to Madrid, told El País newspaper that his country planned to continue buying Spanish debt. "During these times of crisis, China feels it is a requirement to support Spain and the EU to work together to end the crisis," Bangzao said. "We are not coming empty handed."

PS
There will soon be more than enough of Spanish wine in China. The best Rioja Gran Reservas are of course reserved for the party and business grandees. But the politybyro of the governing Communist party has one major problem to solve: how on earth will ordinary Chinese country folks start drinking cheap Spanish red wine with their daily rice?