Archive - Aug 24, 2011 - Story

We wish we had some good news to report this morning.... But we don't.

Following yesterday's plunge in the German ZEW investor confidence reading, today we got yet another confirmation that Germany's economic in freefall, after the IFO Business Climate survey printed at 108.7, the lowest in more than a year, down from 112.9, and a big miss to consensus of 111.0. The 4.2 drop was the highest since November 2008, when it plunged by 4.2. In summary, today’s disappointing Ifo data, if repeated in coming months, points “at least to sharp deterioration of growth, perhaps even recession,” Ralph Solveen, head of economic research at Commerzbank says." And unlike America, where hope is the only thing pushing investors forward, in Germany it is the inverse with the expectations component dropping belopw the 10 year average of 100.5, for the first time since July 2009, while the current assessment component is still above the 102.7 long-term average. Should this collapse in hopium consumption jump across the Atlantic, watch out America. Furthermore, while as was noted before, Merkel's continuing refusal to adopt Eurobonds is nothing new, today we got a new kink after German president Wulff questioned the legality of ECB bond purchases during a conference at Lindau, claiming that bond buying damages the ECB's independence. Wulff cited an article in the European Union's fundamental treaty, which prohibits the ECB from buying bonds directly from governments. "This ban only makes sense if those responsible don't circumvent it with comprehensive purchases on the secondary market," he added. "What independence?" might add anyone who has seen the global printing cartel in action over the past 3 years. Yet the recent expansion in the SMP, which has bought about €40 billion in Spanish and Italian bonds, is the only thing keeping Europe afloat now: if this were taken away, it is the beginning of the end. Another complication to any sustained EUR rally, is that the Finnish government announced overnight it is sticking to its collateral side deal with Greece, a move that apparetly has Germany fuming. Expect headlines as  Finland’s govt will meet this afternoon to discuss Germany’s rejection of collateral agreement the cabinet struck with Greece on Aug. 16, newspaper Helsingin Sanomat reported on its website without saying where it got the information. This may well be worth 200 pips in the EURUSD... to the downside. And lastly, the cherry on top is that Greek 2 Year bonds, just soared above 40% for the first time ever! So much for bailout #2. Time to star pricing in the 4th iteration as the 3rd one is now a certainty. All this means that iTraxx Fins Senior is now at an all time high of 255, +4 bps, while the Sub Index is also at a record of 453, +9bps. Look for a resumption in the serial close of trade of all Italian banks before Europe shuts down at 4:30 pm local.

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We truly can only hope that this Google Plus account of Paul Krugman is merely a well-orchestrated parody, because if it is indeed that of the self-styled uber-Keynesian, the time for the public outrage, his economic beliefs aside, has arrived. In a blast post on Google's imitation of twitter and facebook, which should immediately result in the termination of the Nobel prize winning economist if it was indeed penned by him, this particular account of "Paul Krugman" writes: "People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage." Translation...well it's pretty obvious, but for those laboring under the aftermath of a full frontal lobotomy, the person who tweeted this essentially yearns for his voodoo economic religion to be validated following countless failures of Keynesianism (no, really, after this latest injection of X^x *illion dollars into the economy things will really be well), at the expense of death and destruction. Even more poignant translation: "Krugman" would like nothing more than to put an equal sign between the death of a human being and its proportional GDP replacement value. What next: Krugman lamenting that only certain races end up getting killed in conflict, those whose replacement potential is too low, demanding more death? Or that X number of deaths would have been more stimulative if it was really XXX? This is about as close as we will get to a Keynesian admitting that reparations for death and destruction are the only two special clauses under which fiscal stimulus does work. Which of course means that with idiots such as the poster of the above who actually thinks this, be it Krugman or some of his countless voodoo brethren, and with their proximity to the president, the only logical explanation is that a war is coming, and is being welcomed by all these s[h|c]am "economists", for whom human death and suffering is a fair tradeoff in preserving their tenure or modestly-paid, liberal publication blogging jobs. If this indeed Krugman's account, it is imperative that the NYT immediately terminate this pathologically deranged and homicidal psychopath. Institutionalization in a mentally insane ward may be a proper subsequent action.