John Taylor: "Dead Man Walking...The Euro Is Finished"

Tyler Durden's picture

By John R. Taylor, Jr., CIO of F/X Concepts

Dead Man Walking
May 6, 2010

One of the incidents that I remember from my youth was the first time I saw a chicken slaughtered and running around headless for quite a few minutes before it keeled over and died. The euro is at that stage. Its life is finished, but it will be around for some time before it becomes a subject of historical analysis. Actually the euro was always a short term solution, even on the day it was born. There were only two possible outcomes: the euro would blow up, or it would lead to an EU with taxing and borrowing authority. Theoretically those two choices are still possible, but the euro’s disintegration is moving so quickly and the political barriers are rising so fast that the chances of a much closer and ever tightening political bond between the internal surplus countries and the internal deficit countries is basically non-existent. Fifty years ago, Europe had some great leaders in Robert Schuman and Claude Monnet, who had the vision to start the common market, but it does not have the visionaries necessary to take the next step. Building Europe has always been done from the top, by the politicians and the corporate chieftains who had the most to gain from it. In the beginning, the man on the street went along with it because it cost him nothing and it would keep his children out of the next war. Most of the time, there was no cost to the average European, only benefits: more products to buy, better roads and holiday destinations, and the feeling of being a global leader. The farmers got mad in the 1980’s but the Common Agricultural Policy exploded with butter and other mountains growing larger and the farm lobby was paid off. When the euro came along, interest rates dropped everywhere south of the Alps and this meant that things bought on time – like cars and appliances – were cheaper and houses were easier to own. Despite some gripes about inflation as prices were rounded higher, the changes were pleasant, not painful. All of that has changed. Now having the euro and being a member of the European Monetary Union will be hard on almost every voter – for as far as the eye can see. The United States dollar was forged in war, but even that wasn’t enough. The country had to go through another six or seven years of disjointed financial sovereignty, somewhat similar to the current euro structure, suffering internal dissention while continually being threatened from outside before it made the change to a more centralized (but still not modern) system. The critical actor who served as midwife at the dollar’s birth was Alexander Hamilton. A headstrong leader, Hamilton, had the power and foresight to deal and compromise his way to success. The European equivalent is nowhere to be found.

Europe is dead. The European nations are the victors, and the way ahead will be one hell of a mess. Without taxing and borrowing power, there is no way to square the inter-euro trade balances between the countries except ‘internal devaluation,’ which means years of deflation and poverty for the voters – and protestors – of the deficit countries. Our pencil pushers and Excel experts have made lots of projections on the Greek situation and can find almost no possibility of success. The EU/IMF team projects Greek debt at 149% of GDP when this rescue ends, but their nominal GDP estimates are incredibly optimistic when salaries and jobs are cut dramatically. We see a 20% decline over the three years as a good outcome, the debt would stay the same, and the ratio goes to 186% of GDP. Almost like Japan, but foreigners own the Greek debt – no way! This rescue reminds us of Bob Rubin’s rescue of Russia in July 1998, which lasted about one month before the whole house of cards collapsed. We knew that one couldn’t work, and this one can’t either. It might take longer, but the euro is finished.

Goodbye euro, hello drachma, peseta, lira, and the others. The world had hoped for more, none more than the Europeans themselves, but now we are all left to pick up the pieces.

h/t Teddy KGB

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B9K9's picture

Sorry for the re-post, but events are moving so quickly that each thread is being rapidly pigged by the next. This comment is a partial defense of Mako's recurring theme that what we are seeing was destined from the start, so why get excited about what is occurring?


Let me provide a touch of perspective. Most of the popular financial blogs got their starts back in 2007 because they addressed the fundamental nature of the mortgage meltdown.

Fast forward to 2009 as we began to move from market fundamentals to the politics of bailouts. Coincidentally, a new financial blog called Zero Hedge appeared on the scene with all sorts of insider reports detailing the fraud & various illegal activities.

I remember coming across this site just a few weeks after it was launched and marveling at the information sources they were posting up on the interwebs. Then came the flury of legal take-down notices and Tyler's decision to move the servers off-shore.

But time & events wait for no man. Now the world is waking to the fact that it was always a scam, so where's the thrill in discovering new cover-ups & other blatant illegal activities?

What Mako is advising Tyler is that the game is now moving on to the process of reform. And by that I don't mean audit the Fed or other such meaningless nonsense. If Tyler wishes to see ZH escape the same fate of other stale blogs which couldn't keep up with changing demands, then it is time to begin focusing on the next stage of the game.

The next stage is where the rubber hits the road. Reform might be peaceful, but as usually happens throughout history, it has its periodic 'hiccups', which is what we are seeing play out in Greece.

I've advised Mako to try and be more constructive - people understand the message. It's time to add value by analyzing how exactly the existing credit-money system is going to be modified & replaced.

Simon Jester's picture

Yes, I'm listening as well.

There are some of us out here who realize that there simply aren't any true solutions that will save the current paradigm in any recognizable form. It is rotten through it's core and must be discarded without remorse.

IMHO, the complete implosion of the current system MUST happen, in order to rebuild a new, sustainable system upon it's ashes.

Of course, this will not be a pretty process. Unfortunately, we are fresh out of painless ways out of this mess.

Reform? Reform what? Please.


WaterWings's picture

Pretty much. Right now I think ZH is trying to maintain credibility (even thought they are the most credible source of information on the web) and pushing that limit gets you labeled. Hell, ZH is already labeled, so I think we are Jack and Marla, watching out the window, waiting for the detonations.

This is a very strange time in my life.

JacksCompleteLackOfSuprise's picture

Somewhere between BAU and Mad Max lies the future.

I fail to see how the 'political class' can possibly reform themselves.

I have noticed the same issue up and down our society, how do you replace the whole thing at once?

Teachers are a good example. We need better teachers, and to attract them we should pay them better. But how do we get rid of the old ones?

Extend that to a govt, and there is the issue of 'institutional knowledge', and the fact that all those being groomed for leadership are just as corrupt as the ones in power now.

To summarise, where do you find people who are simultaneously experienced/capable of running the show WHILE resdesigning it, who havent already been corrupted?

Adam Neira's picture

A Rubik's Cube can always be solved in 27 moves no matter how diabolical it's configuration.

JacksCompleteLackOfSuprise's picture

thats a really interesting comment, makes me think. Could there be some sequence of events and choices which could 'solve' it? What would a solution look like really?

WaterWings's picture

If only we had some Anti-Federalists around to ask.

But would "we" listen? They're sending kids home from school for wearing the American flag:

Cpl Hicks's picture

True, but you can't take a building that has been leveled with explosives and blow up the pile of rubble back into a building.

WaterWings's picture

Speaking of bombs in buildings the Ryder truck had help:  @ 1:20

Adam Neira's picture

"To summarise, where do you find people who are simultaneously experienced/capable of running the show WHILE resdesigning it, who havent already been corrupted ?"

G-d always makes sure that a certain number of righteous souls are present down here on terra-firma. These people hold the very fabric of the universe together. Dynamic, multi-faceted problem solving is required. Time is both linear and expansive.

JacksCompleteLackOfSuprise's picture

Amen to that, you sing like an angel :)

Communication is the key right now, the PTB's strengths are organisation and illusion.

I work for a finance company, and some of us see it comming.

PS: According to the, the reason for the GBP selloff in the last hour is comments by a German opposition poli saying he will vote against the Greek bailout.


chumbawamba's picture

Yep, and you're welcome.

I am Chumbawamba.

JacksCompleteLackOfSuprise's picture

The key objective of the conference is to examine weaknesses in the current international monetary system, and identify reforms that might be desirable over the medium to long run to build a more robust and stable world economy.

Cursive's picture


I agree we should be more constructive.  Mako's comments are somewhat fatalist.  Maybe we are entering a more activist period and until I see something like ZH 2.0 the best vehicle to take it to the next level is the Swarm.

JacksCompleteLackOfSuprise's picture

not if the PTB have anything to say about it...


activist + Patriot Act I&II = Guantanamo cell

Cursive's picture

Maybe you are correct, but doing nothing and accepting debt slavery is not a good alternative either.  It's not as though we have a "no personal harm" alternative here.  Prisoner's dilemma?

JacksCompleteLackOfSuprise's picture

im not saying 'do nothing' , but be aware that if tshtf (Weimar) there will be ... issues.

The best thing we can do right now is communicate with people around us, and warn them of what it will look like before the barbed wire goes up.

chumbawamba's picture

Gold, guns and garden are the way.

Self-sufficiency, self-reliancy.

We can only kill the beast when we deprive it of a need to be.  Stop fearing the beast: no amount of tribute will quell its appetite for your soul.  Instead, learn to ignore it, and live your life according to how you see fit, and let others do the same.  Respect your fellow humans, and require the same of them.  Take personal responsibility for yourself, your community, and your family.

That's how we fix this.  One individual at a time.

I am Chumbawamba.

SteveNYC's picture

Chumba, I'm impressed. One person at a time, one person taking responsibility for both their actions and their "internal" state. To ensure that the "bad seeds" that dwell within themselves, whether they be greed, hatred, selfishness, sloth etc. are not passed onto those around them, but are transformed.

All we ever need to do is take responsibility for our selves. The way we treat others will then be a natural by-product of this process of introspection. Some will do more, sure, but if all just spend some time doing this, learning about themselves, weeding the garden, we might just get throught this.

chumbawamba's picture

We've been discussing how it's going to be replaced.  I regularly sum it up in two words: GOLD BITCHES!!  I'm not sure how to make it much more simple than that.

We will eventually return to some form of transactional currency that includes a paper component, and that paper component may one day once again give rise to a fiat-based currency, because humans are generally stupid.  But for the meantime, we will likely initially fall back on barter and trade for a short period while the people who had the prescience to accumulate real money start spending it into the economy so the rest of you can have some money to spend as well.

There will be a long period of collapse, deflation, devaluation, etc.  Meanwhile, in the background, in small local groups that will eventually spread like a slow-moving brush fire that eventually meet up with each other, our currency system will be rebuilt.  The medium will be metal, just as it always has been.

The overall winners will be people who know how to do things (practical skills, like fixing a motor, rigging a well, building a solar water heater, repairing a firearm, etc.) or people who have a lot of stuff that will be useful to a broad array of people.  Having lots of "things" gives on a better chance of having something that someone else will want.  At least until the money starts flowing again.

I am Chumbawamba.

JacksCompleteLackOfSuprise's picture

Nice vision, would possibly happen except for the guys with the FEMA jackets and infinite ammo who will round you up 'for your safety/survival'.

I dont think the PTB are going to just give up and start growing corn.

Whizbang's picture
Finally someone else gets it! If the u.s. loses the ability to get funds on the internation credit market, they will simply confiscate your gold, and probably your 401k as well, you will be compensated with 30 year t-bills, which will be advertized as safer and protected from "greedy speculators". This is already being discussed in some circles here in D.C. that would horrify you. 
Whizbang's picture

I hate to break it to you, but your .38 special is not going to mean a whole lot against swat and the national guard. However, you should be aware that I have no intention of taking anything. I just want to remind people that the country's supply of gold has been confiscated before, and at need, probably will be confiscated again.

WaterWings's picture

1) (eats class III body armor)

2) National Guard/SWAT will have far more problems than me if they try to confiscate anything - seizing 401ks will be a catalyst for violence.

3) I would love to see the accounts of gold being confiscated. No gold was physically confiscated.

DoChenRollingBearing's picture

They will have to come and take my gold too.

I and many others have ARs and AKs.  Too many of "us" for "them" to take on.  And not all cops and soldiers will shoot on their fellow citizens.

Still, the next few years will be interesting.

WaterWings's picture

On another thread a former marine officer mentioned that troops come largely from the intermountain and southern states. The ones that are passing laws right now on the road to secession.

It'll have to be blue helmets - and that's open season.

merehuman's picture

lets not worry about our gold so much. Lets instead see what we can do for our community to strenghten it.

Plant fruit trees along the roads, it will pay off for our children.

Let the nation solve itself, work/love, think  LOCAL

Inevitably as all falls apart you are left with your neighborhood and assets at hand.  Communities will find their own leaders and teachers in time.

Trust a little, fear only makes the illusion seem more real. No  true harm can be done to any of us. Perceived harm is based on attachment  to illusion and its values as culturally taught.

We are not human so much, we are living awareness. The only real death is to live in ignorance and without love. So fear not, smile at the day and your felow travelers in time and space.



chumbawamba's picture

Your word is good.

I am Chumbawamba.

WaterWings's picture

I usually tune out new-agey garbage but your previous posts prove you walk your talk. Thank you fellow traveler.

SteveNYC's picture

Actually, Merehuman really "gets it". His stuff is not "new age" at all, but as old as the Buddha. Wise words, see through the illusion. Namaste gents.

WaterWings's picture

Agreed. I'm a greenhorn.

Chump's picture

And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, polkers, or whatever else was at hand? After all, you knew ahead of time that those bluecaps were out at night for no good purpose. And you could be sure ahead of time that you'd be cracking the skull of a cutthroat. Or what about the Black Maria sitting out there on the street with one lonely chauffeur - what if it had been driven off or its tires spiked. The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin's thirst, the cursed machine would have ground to a halt!

Aleksandr Isayevich Solzhenitsyn

WaterWings's picture

Especially if they knew what fate awaited them. Alas, just about any sudden loud noise requires years of victim counseling these days.

They have no idea what is coming:

Burnbright's picture


You seem to be under the impression that the US has infinite supplies and infinite man power at their disposol. They don't. It would really only take 100,000 people or so to fight back in this country and the government would lose. Hell it would take even less people to tie up the court system and bleed the country dry through costly and time consuming legal battles.

Whizbang's picture

well, the latter would be a better way to go, but in the end it doesn't matter. All of you talking out of your ass on a public forum about violent revolution should realize that we are already in the globalization trap. As long as the fed can print infinite amounts of money, and has the reserve currency at its disposal, for all intents and purposes it does have infinite resources. In the interest of international socialism horrors beyond your imagination are justified by men and women who don't see you as people, but numbers on a page.You have no idea what little treats your tax dollars have been working to develop in the DARPA labs.

May I remind you that the united states government just obliterated two sovereign nations in the middle east, killing an estimated 300,000 civilians over the consolidation of oil producing nations for the purpose of "stability". The Khmer rouge, darfur, the soviet union, cambodia, all of this has happened before, and the people were slaughtered wholesale. It can happen here too. The federal government does not rule with the consent of the governed, it rules through the threat of overwhelming force.

WaterWings's picture

Which is why it will collapse. Which is why you want gold. The dust always settles. The United States will balkanize - any "revolution" will be between military units. No way in hell civilians are going to "organize" - all those groups are infiltrated anyway - and they will stay local for self defense. The Hutaree case is falling apart because it's still legal to talk about violent revolution - it's not a good idea to do so because Mako's probably right. And if he is it will be very important you stay far away from areas that will likely be fought over. Very far away.

I would say 1,000,000+ direct and indirect deaths in the sandboxes. The Army is trying to keep the suicide rate from getting too high. 

Double down's picture

How is the SWAT being paid?  With my Gold?

chumbawamba's picture

Sure, if you want to be a coward and an idiot, then obey.

But if you're like me and hundreds of thousands of other people, you will not obey.  You will tell them that if they keep trying to impose their control, you will fight back.  And if they take you out, there are ten more behind you, and ten more behind them.

This is where we make our stand.  Admitting defeat before we've even started is a bit retarded.


I am Chumbawamba.

RobD's picture

They can have my 401K, it's not going to be worth spit anyway. As for my other stuff, well there are not that many feds, what less then 100k that are armed, not counting the mil? I guess if they find me either I will be unlucky and die or they will. Better to die free then live as a slave I suppose.

Ripped Chunk's picture

There are not enough FEMA jackets and rifle to stop everyone.

And many of those mindless fucktards that sign on for the law and order gig have families too and eventually succumb to animal reason.

Whizbang's picture

most of them will continue to do exactly what they are told. Right now one percent of our population is currently locked in prison. Another .001% that make up the gold owning population is not even going to raise eyebrows.

chumbawamba's picture

Dude, we have guns.  And lots of bullets.  And we're going to use them anyway, so it may as well be defending our lives and liberty.

Liberty or Death: in either you are free.

I am Chumbawamba.

JacksCompleteLackOfSuprise's picture

I wish it were true, but there are always plenty of brownshirts.

Look at it this way, you have a choice...

1) Go independent and face the possibility of being rounded up by brownshirts or not being able to feed your family

2) become a brown shirt


As long as the FEMA jackets come with 3 meals a day for you and family, plus all the raping you can do, they will never run out of volunteers

Adam Neira's picture

Have faith in the potential goodness of human beings. The noblest of actions can surface in an emergency. We have the gift of free-will.

chumbawamba's picture

Try to make the best of your stay behind the chainlink fence.  We'll try to liberate you as soon as possible.  It might take some time, as we'll be fighting every inch of the way.

You can pay us in beer later.

I am Chumbawamba.