From Volume 37, Issue 48 of EIR Online, Published Dec. 10, 2010

Western European News Digest

'The Euro Is Doomed'

Dec. 1 (EIRNS)—A senior U.S. intelligence source, who has been monitoring the Irish debt crisis by the hour, told EIR today that, in effect, the European Monetary Union is dead. For the past 72 hours, there has been a total freeze-up of the European corporate bond market. No capital has been raised, especially for Irish and Portuguese companies. "It is worse than the freeze-up in the United States in 2008, and there are significant amounts of corporate paper reaching maturity in Europe, that must be rolled over."

The source confirmed that the only way to save the euro would be for the ECB to turn on the printing press and go for "quantitative easing." But, nobody even knows what it is going to cost to bail out the Irish, Portuguese, Spanish, Italian, and Norwegian debt; and there is no consensus among European heads of state and policymakers as to what to do. "They are damned if they do, and damned if they don't. If they start printing euros, to buy up the sovereign and corporate debt, the euro will collapse in value, and this will trigger immediate hyperinflation," the source went on. "We are already on the verge of a run on the banks in Portugal, Spain and Italy. When it takes off, it will happen all at once."

Irish Mass Strike Threatens To Sink Bailout

Nov. 30 (EIRNS)—The Irish mass-strike process is expanding by the day, and includes trade unionists, students, the young and the old, in a struggle to secure the future of Ireland. On Nov. 28, the day after 100,000 Irish men, women, and children took to the streets, the trade unions met Nov. 28, to map out more protests and strike action, ahead of the government's budget vote on Dec. 7. The trade union UNITE is planning a "campaign of civil disobedience" ahead of budget day.

"Saturday's march in Dublin showed that the people of Ireland are not willing to sit cowering in the corner as their future is sold for buttons by a political leadership intent on bailing out an out-of-control banking system," UNITE regional secretary Jimmy Kelly is quoted in the Irish Independent as saying. "We're not going to change this government now, but the only hope is to go beyond marches and protests. We've got to put strike action firmly in place."

Socialist Party leader and member of the European Parliament Joe Higgins called for 24-hour national strike on budget day, a suggestion Kelly said he would support.

Irish Pension Fund Looted To Bail Out Banks

Nov. 29 (EIRNS)—Out of the entire EU85 billion ($113 billion) international bailout package for Ireland announced over the weekend, the only component that is hard cash, is EU17.5 billion ($23 billion) that will be put up by ... Ireland itself! In fact, that money will be looted from the country's National Pension Reserve Fund and handed over to the Inter-Alpha Group banks "immediately," as part of the first tranche of funds to be pumped into the bankrupt banking system. The entire country is in an uproar over the fascist looting scheme, which had been kept secret until yesterday's announcement.

Latest Irish Poll Puts Sinn Fein Ahead of Ruling Fianna Fail

Dec. 3 (EIRNS)—The latest Irish poll shows the ruling Fianna Fail party dropping to fourth place, behind Sinn Fein, while the latter more than doubled its rating, from 7% to 16%. This means the Fianna Fail would go from 78 seats to just 23, while the Sinn Fein would most likely have close to 20 or more seats.

The increase in the Sinn Fein's popularity is related not only to their winning of the recent by-election, but the fact that party president Gerry Adams has announced his intention to run for parliament, according to the Independent of Ireland. The poll showed that among 18- to 24-year-olds, Sinn Fein is the most popular.

Iceland President: We're Better Off for Having Let the Banks Fail

Nov. 29 (EIRNS)—Iceland President Olafur R. Grimsson, in an interview with Bloomberg, said his country was much better off because it refused to bail out the banks. "The difference is that in Iceland we allowed the banks to fail," Grimsson said. "These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks."

Earlier this year, when the Icelandic government negotiated a draconian bailout agreement which was approved by the Icelandic Parliament, Grimsson exercised his right as President to put the issue as a referendum before the people, who overwhelmingly rejected it.

Expect Upheaval with New Spanish Austerity Package

Dec. 3 (EIRNS)—In the midst of a major strike of air traffic controllers, which led to the militarization of most airports this evening, Finance Minister Elena Salgado announced a new package of austerity measures today, issued by decree and effective immediately.

Coming on top of a $19 billion austerity plan announced last May, today's package includes reduced taxes on small and medium-sized industries, privatizing 30% of the state lottery, 49% of the AENA airport agency and 100% of the Madrid and Barcelona airports, among others. The government hopes to reap EU14 billion from these privatizations, and a higher tax on tobacco is expected to yield EU780 million.

More "painful" measures include the elimination, as of February 2011, of a special EU426 ($560) subsidy for the unemployed who have exhausted their benefits, which last for a maximum of two years. The government has also set Jan. 28 as the date on which a pension reform bill will be sent to Parliament, to discuss raising the retirement age to 65 from 67, and freezing pensions for all of 2011.

The UGT trade union federation, which is planning major protests, is warning that eliminating the unemployment subsidy will affect some 600,000 people, who will now be added to the 1.1 million unemployed who have no unemployment insurance.

Italian Minister Says Speculation 'Worse than AIDS'

Dec. 1 (EIRNS)—Rising costs for Italian debt (4.7% yesterday on ten-year bonds) are feeding nervousness in and around the country, although the next bond sale is not scheduled until next year. However, the perspective for a government crisis on Dec. 14, and of early elections in Spring, is supplying grounds for concern.

Whereas Economics Minister Giulio Tremonti is keeping his mouth shut, Undersecretary of State to the Prime Minister Gianni Letta yesterday referred to Italy becoming a target for financial markets, saying speculation is "worse than AIDS" and "someone should find a vaccination."

The Financial Times editorial today warns Italy that if it wants to avoid a financial attack, it should help save Spain. Spain is the last frontier for Italy, the FT says. If a bailout for Spain becomes necessary, Italy won't be able to sustain its quota in the bailout, and the whole thing falls apart.

Ireland Mass Strike Brings Anti-Austerity Rallies Back in Greece

Dec. 3 (EIRNS)—The escalation of the mass-strike process in Ireland has energized Greece. The PAME trade union federation has called for a general strike on Dec. 15, and a mass demonstration in central Athens. Yesterday, about 1,000 members of a student group backed by the Communist Party, marched through central Athens to Parliament, to protest austerity measures, including education cutbacks, and said that they will be out in force for the Dec. 15 nationwide general strike.

Although not widely reported, it seems that strike actions have been going on continuously. At the end of November, the Seaman's Union struck for several days, putting a halt to inter-island shipping. The journalists' union staged a 24-hour strike, blacking out all news.

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