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Bailout in Spanish translates to "rescate," which also means "ransom," and that is exactly what Spain just received for its part in holding the eurozone hostage. Please drop the first payment on the front steps of the Museo Nacional del Prado, and we'll be in touch.

But the phrase that spoke the truth, and summarized the ongoing European "mardi gras," came from none other than Jerónimo de Sousa, the chief of the Portuguese Communist Party, although he's hardly a role model and fails to realize the true nature of the patient's condition. He said, and I translate, that the European bank bailout is like "picking up a pitcher and watering the desert." Best analogy yet! Then, and as expected, he pointed out that this a reflection of capitalism in crisis, when in fact socialism is the ideology on life support, while the inevitable decision to pull the plug continues to be delayed.

Meanwhile the populace is scrambling for direction and the French left was seen winning parliament control, which will attempt to keep the status quo, plug and all. The writing is on the wall, and French President François Hollande restored the right to retire at 60, leading the way in preserving an unsustainable social model and reversing much needed reforms.

The measure will allow those who started work at age 18-19 and who have paid 41.5 years of pension contributions to retire at 60, not the minimum of 62 as set under the Sarkozy reforms of 2010. The government said more than 110,000 people would benefit.

However, the reversal itself covers a small segment of the working-age population, in a country with 65 million people and a labor force participation rate of 56.3%. Although Mr. Hollande may talk a good political game, he fully understands the nature of the disease and the limitations of his promises.

The Spanish bond auction last week provided the markets with some relief, yet the numbers were puzzling. The bid to cover was 3.29 with the yield at 6.04%, while the previous rate was 5.74% with a bid of only 2.56. Considering the continuous stream of negative news concerning Spain and the immediate uncertainty, why would demand exceed the previous auction by 28% for a lousy 30 basis points? Ghost buyers at work. And if the message hasn't been fully understood, China reiterated its position again on the day of the auction.

The country's sovereign wealth fund said it will not buy any more debt in Europe until the region takes radical steps to restore credibility. "The risk is too big, and the return too low," said Lou Jiwei, the chairman of the China Investment Corporation.

In addition, "China's sovereign wealth fund China Investment Corp has cut its stock and bond investments in Europe as it sees rising risks of a euro zone breakup," has reported by Reuters. Then as Spain signed up for a 100 billion euro credit card, Ireland smelled opportunity, according to France 24.

Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.

And that's where the "ransom" concept truly applies, because the reforms imposed on the first three borrowers are no longer required, and the hostage takers are in control of the situation. Furthermore, it is not clear where the funds will come from, and to emphasize how the stage is being set for the private market to be left holding the bag, once again, the next fact is important.

If the cash were to come from the ESM, its treaty provides it with preferred creditor status, junior only to the International Monetary Fund. The EFSF isn't explicitly a preferred creditor, prompting Finland's Finance Minister Jutta Urpilainen to demand collateral if the facility were used to advance the money. Even so, the Greek example showed that official lenders aren't willing to accept losses, preferring to force private bondholders to take greater writedowns in a restructuring.

Euro bonds are once again on the front burner, as the weak euro member states are dragging everyone to the party, whether they like to dance or not. But now there's talk of a "master plan," or Euro 2.0.

The essence for this road map calls for the four EU institutions to develop a master plan behind the scenes for a new stable Europe. According to the report, 3 or 4 rounds of conversations have been already planned in the coming weeks as Van Rompuy is expected to present the key elements of the plan at the EU meeting in late June. By the end of the year, the EU Heads of States and Governments should ultimately decide on this "revolutionary" plan. The proposals for the this plan are said to be focused on 4 main areas so far: structural reforms, a banking union, a fiscal union, and a political union.

Revolution it is! Political and fiscal integration, combined with debt mutualization, is music to everyone's ears, but to accomplish those goals will make bailouts look like child play. If anyone thinks that a true United States of Europe is even possible, I'll state categorically that they do not understand Europe and the various cultures. Take it from a guy that was born in Lisbon long before the treaty was named after the city. Lastly, European bureaucrats should read a history book on how the United States of America - their goal - came to pass, and the hardships along the way, even though the people in the former colonies had far more in common than any two countries in the old continent do today.

Source: Spain Gets Ransom, Eurozone Still Hostage