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FX Heatmaps: EUR Rolling Over
After opening strong, the EUR is now slowly rolling over, on increasing concerns over bund spreads which are once again surging. If the EURUSD moves to white, look for futures to hope and pray that Australia can sustain the greenness there. Else, all those who were bidding up futures overnight are about to offload accumulated and now largely underwater positions.
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Who cares about bond spreads? The ECB will buy them with free money.
No worries, Ben's "dollar droppin' heli" has in-flight refueling...he can fly that bitch 'round the world if need be.
By Ambrose Evans-Pritchard
Published: 5:37PM GMT 31 Oct 2010
Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face “orderly” bankruptcy.Bondholders will discover burden-sharing. Debt relief will be enforced, either by interest holidays or haircuts on the value of the bonds. Investors will pay the price for failing to grasp the mechanical and obvious point that currency unions do not eliminate risk: they switch it from exchange risk to default risk.
What were investors thinking when they bought Greek 10-year bonds at 26 basis points over Bunds in 2007, below the spread between British Columbia and Quebec?
We must keep in mind the feelings of our people, who have a justified desire to see that private investors are also on the hook, and not just taxpayers,” said German Chancellor Angela Merkel.
Or in the words of Bundesbank chief Axel Weber: “Next time there is a problem, (bondholders) should be part of the solution rather than part of the problem. So far the only ones who have paid for the solution are the taxpayers.”
These were the terms imposed by Germany at Friday’s EU summit as the Quid Pro Quo for the creation of a permanent rescue fund in 2013. A treaty change will be rammed through under Article 48 of the Lisbon Treaty, a trick that circumvents the need for full ratification. Eurosceptics can feel vindicated in warning that this “escalator” clause would soon be exploited for unchecked treaty-creep.
Mrs Merkel needs a treaty change to prevent the German constitutional court from blocking the bail-out fund as a breach of EU law, and a treaty change is what she will get. “This will strengthen my position with the Karlsruhe court,” she admitted openly.
One might argue that bondholders should have been punished for their errors long ago. The stench of moral hazard has been sickening, on both sides of the Atlantic. An orderly bankruptcy along lines routinely engineered by the International Monetary Fund is exactly what Greece needs. It makes no sense to push Greece further into a debt compound spiral by raising public debt from 115pc of GDP at the outset of the “rescue” to 150pc at the end of the ordeal.
If you strip out the humbug, the Greek package allows banks and funds to shift roughly €150bn of liabilities onto EU governments, or the European Central Bank, or the IMF. Greek citizens are being subjected to the full pain of austerity under false pretences, without being offered the cure of debt relief.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/810041...
Ja Herr Weber!
The Dutch goverment are submitting a law which will allow the Dutch Central Bank to sieze and liquidate assets of "troubled" financial institutions, without shareholder approval.
Before you dismiss this as small country stuff, know that the Netherlands is the 6th largest economy in the EU zone.
Next time Axel next time ....... Ha
Populist nonsense wrapped up in a Bullshit.
Axel Webers Job is to protect Bondholders not taxpayers - he needs taxpayers to subsidise his clients.
Anyhow I believe it when I see it - speaking as a Irishman bring it on - the Core is merely transferring wealth to itself - do you think the CBs and their strategic host countries want to stop this process.
Now that credit creation has stopped they are strip mining my country and using our collective guilt as a psychological weapon of war.
Soon there will be little left.
the Core is merely transferring wealth to itself - do you think the CBs and their strategic host countries want to stop this process.
Exactly.
No worries, pump stawk futures...its all good.
With POMO today the Euro should be having a nice upside bounce shortly. In 1995 the low on USDJPY was 79.70....not too far away now...long term dollar bears should have their eyes on that level....once/if that breaks we are left in no-mans land.
This has got to be the funniest financial term out there. Or is my mind in the gutter.....again?
I believe that is the precursor to the annual DRE.
wtf is up with crude? am I missing something?
People are anticipating Ben's printing press to be even more powerful this week... It sure isn't based on demand, that's for sure.
certainly seems odd, nothing else seems to be reacting so suddenly as crude, just goes nuts and shoots up $2 out of no where.
Jacking up crude keeps the futures up or lifts them higher.
Falling or weak US$ = Higher crude price
on one side of the ring, euro, on the other, dollar.....and both are trying to lose the fight. so i guess it will be a draw with both knocked out.
haha the ugly truth
it is really ugly too, for most of us...it is not easy to escape this falling house.
after hitting themselves and not each other.
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