Spanish bonds in Andalucia
Can I hear an echo of 2009?
Oh, please, leave the liquidity injections
John Maynard Keynes is dead and gone
Big black holes in the bank's asset statements
The bailouts of the ECB
Spanish bonds on the Costa Rica
I'm taking out all my money tonight
Spanish bonds, el Euro es finito
Yo te quiero oh ma Eurozone
Spanish bonds, el Euro es finito
Yo te quiero oh ma Eurozone

Spanish weeks in my bank-slash-casino
The anti-austerians died upon the hill
They sang the growth song
They got retrenchment
But after they died it was Bundesbank Hell
Raising the debt load killed the ratios
The unemployment rate was higher than the sky
Spanish bonds shatter the Euro
My economy was sacrificed
Spanish bonds, el Euro es finito
Yo te quiero oh ma Eurozone
Spanish bonds, el Euro es finito
Yo te quiero oh ma Eurozone
 

(Apologies to The Clash)

Spanish bond yields keep going higher, even after the "bailout" arranged late last week. We can now see that socializing the costs of bank bailouts simply isn't working, and that the modern model of banking is seriously broken. It isn't just Spain, these are the same problems that all industrialized countries are facing - they allowed the banks to run wild in issuing debt and now de-leveraging all that debt is destroying economies. The solution is worsening the problem, giving money to banks to re-inflate their assets while socializing the cost by imposing austerity on the wider economy and absolutely killing growth. It's just more acute in Europe because individual countries don't have control over their currencies. But due to the wrong-headed ideas about austerity even countries that do control their own currencies (I'm looking at you UK) are following the exact wrong policies in dealing with the problem.

Yes, the governments should be issuing more currency to avoid deflation, but not to banks. They should be issuing currency and injecting it into the economy at large via fiscal policy - in other words, spending more money. Deficits are a much smaller problem than killing growth. The time to attack deficits is when the economy is growing, not when it's shrinking. Sacrificing virtually every aspect of the economy to ensure that bond holders don't suffer is just insane on every level.

I don't have high hopes that this will get fixed or that austerians will ever change. Policies do matter, and the wrong policies do cause damage to individuals and the economy at large. But I don't see anything at this point that will give me hope.