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Sunday, December 21, 2014 4:10 AM

Europe in Wonderland

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If you don't have the money, spend it anyway, says the Ukrainian government.

Of course, that's no different than the philosophy of any other country, including the US.

In this case, however, Ukraine borders on default.

Please consider Ukraine Can’t Scrimp on Military Spending as S&P Rating Cut.

Ukraine’s president, speaking a day after the nation’s junk credit rating was cut further, said next year’s budget mustn’t cut corners on military spending and should account for the possibility of an invasion.

The war made us stronger, but has crushed the economy,” Poroshenko said. “There’s one article of spending that we won’t save on and that’s security.

Ukraine is finalizing next year’s fiscal plan amid a new cease-fire in the conflict that’s ravaged its industrial heartland near Russia’s border. As its economy shrinks and reserves languish at a more than 10-year low, it’s also racing to secure more international aid to top up a $17 billion rescue. Standard & Poor’s said Dec. 19 that a default may become inevitable, downgrading Ukraine’s credit score one step to CCC-.

With official forecasts putting this year’s contraction at 7 percent, the government needs $15 billion on top of its bailout to stay afloat, according to the European Union.

The European Union and the U.S. are discussing $12 billion to $15 billion in aid to Ukraine and “there needs to be a Russian contribution to the package,” Pierre Moscovici, the 28-nation bloc’s economy commissioner, said at a Bloomberg Government event this week in Washington. A decision is needed in January, he said.
War Has Made Us Stronger

Ukraine president says "War has made us stronger".

That lie is so stupid my dead grandmother knows it from the grave. The evidence is a CCC- debt rating, a step or so above above default, with default imminent.

The story gets even stranger.

To avoid default, Ukraine needs a "Russian contribution to the package” according to Pierre Moscovici, the economic policy commissioner for the European Commission.

Amazing Irony

Europe and the US have crippling sanctions on Russia for the conflict in Ukraine, yet the EC wants Russia to bail out Ukraine while accusing Russia of invading Ukraine.

Icing on the wonderland-cake is the Russian Ruble has plunged nearly 50% this year, but Ukraine needs money from Russia to fight Russia.

Is this complete lunacy or what?

Mike "Mish" Shedlock

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