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Desperation Time In Europe, As Bund Surges To Contract Highs
Risk aversion in euro is back big time. Not just is the euro getting whacked as fundamentals and technicals finally overtake the endless rumor mill, but increasingly desperate rhetoric out of Greece is making it seem inevitable that we could finally see the preparations for the landmark Santorini Sotheby's auction. Adding olive oil to the fire is Greek deputy Prime Minister Theodoros Pangalos, who is now playing Russian Roulette with a fully loaded gun and confusing it for poker, this time saying that it has been Germany's secret agenda to see Greece fail all along (not all that naive - we have been saying it for months). Alas, saying out loud what everybody knows is always a horrible move - just consider the US debt/GDP ratio of 140% which nobody wants to talk about. Quoting T-Pan: "As long as southern Europe is under fire, the euro is being shaken and falling and the conditions under which they (Germany) can win massive exports to the third world, to the rest of the world, are improving. I am quite worried that if a decision is not taken quickly ... then the euro will make no sense and if the euro fails this will take us many decades backwards in terms of European integration." And the courge of stupdity as per Reuters: "Pangalos said Germany was allowing its banks to take part in the "deplorable game" of speculating on Greek bonds." Oh, and don't look now but the Bund just hit contract highs at 123.50. At least real estate prices in America's richest city Newport Beach will hit another record as a result.
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Classic
great, a six-of-a-kind! nobody has never lost with that.
EURO downtrend continues and USD uptrend continues.
Equity markets can't ignore this for long.
The USD weekly chart remains bullish and I still expect a good dollar rally this year.
http://www.zerohedge.com/forum/latest-market-outlook-0
Is it too obvious to suggest that the German's have been complaining that the EURO is too high for some time, given that Germany is a mega-exporter, and the race to debase continues. Letting Greece fail and with it the EURO could be seen as one and the same plan.
+1000. You're spot on: and I agreed with your analysis in one of my earlier posts.
The Germans are having a great crisis. The Euro goes down and helps their exports and the Bund rallies.
The political theater is delicious and the mock hysteria by the Germans makes it all the more entertaining. But the dark side is that real people are going to suffer.
Does "Pangalos" translate to "Pangloss"?
I can't give you figures but speaking from experience here in Ireland - the money supply is dropping like a stone - if the markets decide not to loan us money there will be no money in the peripheral EU countries for even basic needs.
If Governments are not allowed to go into major deficit for many years they will not be able to fill the black hole created by banks not lending.
If the Germans want to go nuclear then we have options also - all that private capital they lent to us will not be paid if we are destitute and they will take massive loses in their favourite commercial banks
It is getting to every nation for themselves time.
If the Euro really does collapse, I laugh at the dollarbulls yucking it up with the schadenfreude. A major fiat paper collapse will get everybody looking at the USD as the next shoe.
Germany can make a go with the mark because their economy is seen as viable...wtf do we have?
You think Lehman was bad, wtf if the euro goes TU. A lot of banks will be completely destroyed.
In the long run a Euro collapse would be best - but it would have MAJOR geopolitical implications. I am not so sure about Germany as their economy is geared towards exporting vast amounts of expensive goods to other EU deficit countries that have used recycled German savings.
Ironically the 3% deficit rule was highly destructive as surplus German savings were put into highly dubious speculative funds that destroyed the sustainability of the Peripheral countries - quite funny really , I can now understand the traditional French view of having strong fiscal spending to counter the excesses of commercial banks and their gatekeeper the ECB.
Interesting. So you are saying that Germany would actually benefit from a Greek default. Pangalos is actually right and Sarazzin is not that crazy as he sounds but voicing official government policy.
BTW: Θε?δωρος Π?γκαλος shouldn't that be transcripted as Pagkalos?
Why is it that the lower dollar (in relation to the Euro) for the last 7 or so years hasn't made exporting a savior for the US economoy (or has it)?
I guess if you can't soften the blow of drowning in debt by debasing your currency, you're in a tough spot. I think life was more fun with all the different European currencies.
The Bund is the only one worth buying. Until we institute state run banks like N.D., all other bonds got to go, except high corporate.
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