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Nic Lenoir On Why The Euro Is About To Crash And Burn, And Why His Concern For The "New Normal" Is Not Slow Growth But Civil War

Tyler Durden's picture





 

From Nic Lenoir of ICAP

Today 6 countries in Europe were the theater of riots. I highlighted in the past that voting turn-out has been on the rise in the past 8 years after a steady decline the 3 previous decades. During the credit boom fat and happy citizens had no time to vote, too busy producing or even more so consuming. Now with unemployment through the ceiling and poor economic perspectives people have started voting again. The next step is that they realize that no one in the political spectrum currently has any guts or brain and therefore no one offers a real credible fair solution, at least for now. When they do they burn things up. Because things are a little worse in Europe economically, and because the people there actually do realize the people in power are monkeys, they have now reached that stage of realization where burning things up is the logical response. Don't think the US will remain immune to this symptom of the new normal (unlike El Erian I have not revised up my forecast, and my concern is not slow growth but civil war). For proof there was a viral video going around yesterday with a man threatening a school board with a gun after his wife lost her job, and it sadly ended in a shooting. Sadly I have very much expected these incidents to become common place and it is certainly going to get a lot worse. I almost wonder if the most fair, clairvoyant, charismatic, and pro-active politician could help us prevent true chaos. I suppose the real question is will someone come along directing the blame abroad to deflect the anger of civil unrest towards an international war. Do not shoot the messenger, I am simply outlining what I consider the most likely scenario. I pointed out in 2008 that the two biggest market crashes of the 20th century were 1907 and 1929... it does not take a genius to do the math.

Looking into what chaos will look like for the financial markets, the elephant in the room is the Euro. The only way it survives in any form is if countries start defaulting. Until then the problem will not go to rest. I strongly believe that defaults are much like treating generalized infection by cutting the worst looking limb. The problem is at the core, in the way it is designed: you cannot manage drastically different economies of countries with dramatically different cultures and laws using the same currency and interest rate curve. Defaulting takes care of the current debt accumulation by poorer countries trying to keep up with the Euro (not benefiting from the tailwind of currency debasement to boost prices in nominal terms they accumulate debt). However the fact is they will find themselves in the same predicament in 30 or 40 years at the latest for the same reasons. But by the same token I do think defaults are necessary, whether it is via outright haircut on debt repayment or by breaking up the Euro with the debt being re-nominated in original currencies using the Euro conversion, in which case a subsequent and immediate currency bloodbath for the PIIGS would be the defacto default.

The problems in the Eurozone will not go away, all the temporary fixes European politicians are trying to throw at the problem are less and less effective, because the market sees that the Euro itself is broken, and so the placebo effect has a shorter and shorter life cycle. For that reason I pointed out last Friday and Monday that because sovereign CDSs in Europe were close to their widest levels still and US swap spreads had tightened back to their lowest levels since the Greek episode in the European saga, it was time to buy 2Y swap spreads. We have seen quite a bit of widening since I first brought it up already, but nothing compared to what I ultimately expect. Of course FRA/OIS spreads are blowing out in tandem. Interestingly it's no the case for the EUR curve. While counter intuitive in theory, this comes from the market structure of the debt markets. European banks have loan portfolios (unsecuritized) they need to fund in USD, and those can't be pledged against EUR deposits or to a central bank. The ECB has also quite a few schemes allowing almost any toxic junk to be pledged to them for cash. Zerohedge had a very interesting observation the other day that the leverage of the ECB is about 6 times that off the Fed. That's about the only thing that makes the Fed looks good. Also the shadow banking system is a lot more developed in the US than in Europe, so when things freeze it picks up momentum and dimension a lot faster in USD than EUR. For all those reasons, USD Libor settings were a lot more sensitive to market conditions during the Greek crisis than Euribor settings. Expect the same this time around. The attached chart of the 2nd IMM FRA/OIS in USD and EUR shows it more clearly than words could.

However it does not mean there are no traces of the damage in European Fixed Income. I have added to this email a spreadsheet where I calculate the "average" eurozone government yield curve using debt-by-maturity compounding. That gives us a quick way to see who are the countries borrowing cheaper than average, and who are those borrowing at a higher cost. Using that logic if we assumed the market premia for the overall debt-load of Europe remained constant if debt was socialized at the Eurozone level, it would cost 17Bn Euros a year to Germany and almost the same to France to keep the PIIGS in the union. If you don't think it sounds so bad, try to think what people in the US would say if Congress voted a $100Bn a year aid to Mexico. I am not sure what the current duration on a perpetual bond is, but it is equivalent to well over a trillion aid package. Not something people should take lightly.

Using these results I also looked at the spread between 2Y OIS (or EONIA fo Europe) and the 2Y government yield (or the 2Y average "Eurozone" sovereign yield). There you see the full damage much more clearly. While 2Y OIS and 2Y US Treasury yields are within 10bps of each other (mispriced? selling US treasuries against OIS is surely a great low carry fat tail insurance!), 2Y average sovereign yields trade over 120bps above EONIA. So if you are not seeing those Euribors getting crushed i tandem with the frnt Eurodollars on this move, you can see that dynamic is the same in terms of fundamental, but market structure and balance sheets mean the mole pops out of another hole. It is a legitimate question to ask whether Euribor settings should set higher. I am working on a combined average CDS for European banks contribution to Euribor weighted by market cap as I intend to show that the Euribor setting in its current form is useless and it should be modified as ultimately it is never good when your benchmarks are completely detached of the reality. But that last bit is for another day.

Good night and good luck trading,

Nic

 


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Wed, 12/15/2010 - 18:48 | Link to Comment MacedonianGlory
MacedonianGlory's picture

The Old Regime is about to take power.

Wed, 12/15/2010 - 19:06 | Link to Comment CH1
CH1's picture

Very interesting comment, Macedonian. Care to provide some detail? Thx.

Wed, 12/15/2010 - 21:06 | Link to Comment Cleanclog
Cleanclog's picture

Actually, hate to post this, I was in Montenegro and Bosnia 2 months ago.  People in Bosnia - especially north of Sarajevo - are exhibiting much more hostility than I witnessed 5 years ago.  Big divides on use of language, what is being built, by who, with what funds and support.  Really evident.   I hope it will not lead to war, but I am not optimistic.  But I think revolutionary style war (the skirmishes are already under way) is coming in the Balkans again and perhaps along Mediterranean Europe.

Wed, 12/15/2010 - 23:24 | Link to Comment CrackSmokeRepublican
CrackSmokeRepublican's picture

The EU was a Jew Rothschild Project pre-WWII.

The Euro will disappear like Jew Bolshevik Communism and Jew "Diversity".

Keep and eye open and a gun loaded...--CSR
-----------

English translation of selections of
"Practical Idealism (Praktischer Idealismus)"

By Count Richard N. Coudenhove Kalergi - published in Vienna 1925.

-Hidden by the European Movement-

Europeans to become negroid mongrels

The man of the future will be a mongrel. Today's races and classes will disappear owing to the disappearing of space, time, and prejudice.

The Eurasian-Negroid race of the future, similar in its outward appearance to the Ancient Egyptians, will replace the diversity of peoples with a diversity of individuals. [22]

http://balder.org/judea/Richard-Coudenhove-Kalergi-Practical-Idealism-Vi...

------------------

Count R. N. Courdenhove-Kalergi is seen by many as the father of the modern European Union. It was him who suggested Beethovens hymn as the EU's national anthem, and was very active in connection with the design of the EU logo which contains 12 stars which symbolize the 12 tribes of Israel. The logo was finalized by the Jew Paul M.G. Lévi. 2)

Otto von Habsburg was Coudenhove-Kalergi's successor as president of the Pan European Union. He is a honorary professor of the University of Jerusalem, and recipient of the 'International Humanitarian Award', of the 'Anti Defamation-League' (ADL) of the Jewish B’nai B’rith Masonery Lodge.

Coudenhove-Kalergi's father was a close friend of Theodor Herzl, the founder of Zionism

http://theinfounderground.com/forum/viewtopic.php?f=21&t=12459

-----------------------

Coudenhove-Kalergi in his autobiography:

"At the beginning of 1924, we received a call from Baron Louis de Rothschild; one of his friends, Max Warburg from Hamburg, had read my book and wanted to get to know us.

To my great surprise, Warburg spontaneously offered us 60,000 gold marks, to tide the movement over for its first three years ....

Max Warburg, who was one of the most distinguished and wisest men that I have ever come into contact with, had a principle of financing these movements.

He remained sincerely interested in Pan-Europe for his entire life.

Max Warburg arranged his 1925 trip to the United States to introduce me to Paul Warburg and financier Bernard Baruch."

Finance theorist Ludwig von Mises (supported by a grant from the Rockefeller Foundation) also participated in Coudenhove-Kalergi's Pan-European Movement.

Later von Mises disciples Arthur Burns and Milton Friedman spread von Mises ideas through a network of secret 'conservative' think tanks, led by the Mont Pelerin Society.

http://theinfounderground.com/forum/viewtopic.php?f=21&t=12459

Wed, 12/15/2010 - 23:54 | Link to Comment CrackSmokeRepublican
CrackSmokeRepublican's picture

Z.H. needs to get a "Flag as Truth" button... This isn't Junk unless you are Z.H. Jew. LOL...

Thu, 12/16/2010 - 04:05 | Link to Comment frenchie
frenchie's picture

Amen

Thu, 12/16/2010 - 04:06 | Link to Comment frenchie
frenchie's picture

Amen

Sun, 01/16/2011 - 02:44 | Link to Comment Andy Lewis
Andy Lewis's picture

ZH needs a flush button to flush shit like you down the drain.

Thu, 12/16/2010 - 13:00 | Link to Comment tamboo
tamboo's picture

diversity/multiculturalism is a joo tool to wipe out white christians.

http://forum.stirpes.net/judaism/7838-multiculturalism-has-no-place-isra...

http://www.iamthewitness.com/

Thu, 12/16/2010 - 04:48 | Link to Comment AnAnonymous
AnAnonymous's picture

Big divides on use of language, what is being built, by who, with what funds and support.  Really evident.

 

That is indeed the major difficulty in the project. People are comfortable in their group and while ascending to a new group in formation might prove profitable, it is all about to know who is going to get what. People want to be better in their new group than they were in the  previous.

The english are comfortable in the English group as they are number one in it. Same for Germans and so on.

The new European group might provide better opportunities. Think of Germans, they will be able to push away their  previous (mis)deeds by claiming the Germans did it, not the Europeans. And they are Europeans now... You see the trick. Good old change in identity style.

Problem in the Balkans is that they are a bunch of minorities. Usually, in transformations like that, the majority use minorities to alleviate their fear, making sure that minorities have to eat the most of the negative sides of the transformation. Hard to perform when you have no  real minorites on your soil.

Wed, 12/15/2010 - 19:11 | Link to Comment Spitzer
Spitzer's picture

Its all bullshit.

The Euro was designed to replace the dollar by floating gold MTM. Oil will be priced in Euro's when the paper gold market dies(COMEX,LBMA,GLD). Book it.

Long live the Euro

Wed, 12/15/2010 - 19:27 | Link to Comment westboundnup
westboundnup's picture

It says alot that if we are to have a civil war, I hope it's along the lines of the U.S. Civil War (the bloodiest in the nation's history), 2 organized armies meeting on the field of battle.  I fear it may be like Madrid circa 1937 in the Spanish Civil War. 

Wed, 12/15/2010 - 20:10 | Link to Comment Simon Endean
Simon Endean's picture

There was a lot more violence going on other than just the massed armies meeting up.  There were plenty of small-scale battles and such, and they started well before Fort Sumter and went on well after Appamattox.

Wed, 12/15/2010 - 21:30 | Link to Comment Freebird
Freebird's picture

Celante forecasts literal blood in the streets 2012 ..
coming to your local mall. ( Not necessary for any red
neck cowboy gunslinging, check out my Uzi bitchez comments thank you.)

Wed, 12/15/2010 - 19:27 | Link to Comment ZeroPower
ZeroPower's picture

Come on man. The GBP (hell, the CAD) are more 'reasonable' replacements than a doomed currency. Do you actually see a country in the EU defaulting? And do you see this event leading EU out of their current mess? I would like to understand your stance.

Wed, 12/15/2010 - 19:46 | Link to Comment Spitzer
Spitzer's picture

The commercial banks inside Europe don't influence the integrity of the currency as much as people think.

The Eurosystem gets swap lines from the Fed and bailouts from the IMF.  When a run on the US dollar finally starts, the Euro can default without the worry that people will be running form the Euro to the dollar. All the while, the international liquidity reserves of the Euro (gold) will be going to the moon.

Wed, 12/15/2010 - 20:23 | Link to Comment nonclaim
nonclaim's picture

It doesn't make sense unless by "going to the moon" you mean something along the Zimbabwean style...

Wed, 12/15/2010 - 20:34 | Link to Comment Spitzer
Spitzer's picture

The dollar will go zimbabwe style which will send gold/ECB balance sheet to the moon

Wed, 12/15/2010 - 21:41 | Link to Comment Freebird
Freebird's picture

Gotta watch those fx swaps, primary dealer frontrunning at
its finest..

Wed, 12/15/2010 - 21:34 | Link to Comment IQ 145
IQ 145's picture

 What a funny statement. you must be joking.

Wed, 12/15/2010 - 21:59 | Link to Comment I think I need ...
I think I need to buy a gun's picture

i agree.....and thats the sense i get from others who have called this entire crisis

Wed, 12/15/2010 - 22:54 | Link to Comment TBT or not TBT
TBT or not TBT's picture

Yep, with europe's deathbed demographics, rising anti-western immigrant population, and their entitlement mentality, they'll dominante all right.   Dominate the news that is.   Being that what bleeds, leads.

Wed, 12/15/2010 - 19:35 | Link to Comment dogismyth
dogismyth's picture

Its the Jesuits dammit!  Read up on the black pope.  In fact, google it and read the first article.  Wowser.

Wed, 12/15/2010 - 20:17 | Link to Comment israhole
israhole's picture

:)

Wed, 12/15/2010 - 18:57 | Link to Comment velobabe
velobabe's picture

civil, bitches†

Wed, 12/15/2010 - 19:05 | Link to Comment doolittlegeorge
doolittlegeorge's picture

what are you holding in your hand?

Wed, 12/15/2010 - 22:14 | Link to Comment Uncle Remus
Uncle Remus's picture

bzzzzzzzzzzzzzzzz

Wed, 12/15/2010 - 18:56 | Link to Comment Jason T
Jason T's picture

Lyndon LaRouche has been saying that by Christmas, the Euro will be dead.  But also that without a Glass Steagal type reorganization of the banks and national credit systems, we get a new dark age.  

 

Seeing what is happening in Greece, Rome, London, Ireland, so forth.. it's not that far off to believe that the global monetary system has the potential to collapse.

Wed, 12/15/2010 - 19:16 | Link to Comment Spitzer
Spitzer's picture

we get a new dark age

No.

The elite are moving to gold via the Euro/freegold. The Elite know the dollars flaws.

Wed, 12/15/2010 - 21:36 | Link to Comment IQ 145
IQ 145's picture

 Moving to gold via the Euro; it sounds like it means something; but I can't quite see what it would be.

Wed, 12/15/2010 - 22:48 | Link to Comment kubrick007
kubrick007's picture

go here and read for about 2 days, it explains it all:

 

http://fofoa.blogspot.com/

 

while your reading, transfer cash to an account so you can wire money to apmex because the second you are done reading it that is what you will immediately want to do.

Wed, 12/15/2010 - 22:03 | Link to Comment I think I need ...
I think I need to buy a gun's picture

i agree with everything spitzer is saying tonight. the garbage media over here makes it sound like they are in huge trouble but its only a few countries and they will either be shaved off or have substantial gold we don't know about.

Thu, 12/16/2010 - 08:17 | Link to Comment fallingman
fallingman's picture

Dominoes, bitchez!

Thu, 12/16/2010 - 09:03 | Link to Comment Calmyourself
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That scenario does not preclude a new dark age.  I believe elites were represented in the last dark age.

Wed, 12/15/2010 - 23:15 | Link to Comment dussasr
dussasr's picture

I would not be quoting Lyndon LaRouche even if his views temporarily aligned with my own...

Wed, 12/15/2010 - 18:57 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

6 countries? Italy.. Greece.. where else?

 

Wed, 12/15/2010 - 19:17 | Link to Comment JohnG
JohnG's picture

Greece was paralyzed by a general strike and violent protests on Wednesday and trade unions staged demonstrations in France, Spain, Belgium, Luxembourg, Denmark and the Czech Republic against government austerity measures one day ahead of what promises to be a fractious European Union summit to agree on a permanent mechanism to handle future debt crises.

http://www.spiegel.de/international/europe/0,1518,734811,00.html

 

Wed, 12/15/2010 - 18:58 | Link to Comment cswjr
cswjr's picture

So, here's a question: PM have been tracking the EURUSD.  When one of the nations in Europe (finally) blows up, do PM go up as a flight to quality, or down the toilet with the Euro?

Wed, 12/15/2010 - 19:06 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Up, flight to quality.

Wed, 12/15/2010 - 19:12 | Link to Comment tmosley
tmosley's picture

Paper and physical diverge sharply.  Paper goes down with the Euro, physical goes to the moon.

This process has already started, as aggressive buying of physical has forced gold and especially silver retailers to raise their premiums.

Wed, 12/15/2010 - 19:17 | Link to Comment Spitzer
Spitzer's picture

ECB Assets (as at January 1, 1999):

1. Gold - €99,598,000,000
2. Foreign currency claims outside the Eurozone - €230,342,000,000

Total reserves at ECB MTM concept innauguration - €329,940,000,000
Gold proportion of the Eurosystem's reserves on Jan. 1, 1999 - 30% (30.19%)

Conclusion: During the last decade of the Bretton Woods "experiment", 1958-1968, gold failed to produce new international liquidity and fell from 66% --> 51% as a proportion of international reserves. But during the FIRST decade of the Freegold (ECB MTM FLOATING gold price) "experiment", gold has risen from 30% --> 60% of the Eurosystem's (international liquidity) reserves.

Think on this one for a while. It deserves at least that.

1958-1968 - 66% --> 51%
1999-2010 - 30% --> 60%

And where do you think it might be going?

1999-->2010-->201_ - 30% --> 60% --> 9_%?

Wed, 12/15/2010 - 19:48 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

If you divide the Euro Gold reserves into the M1 money supply you get roughly 13.5 thousand Euros a ounce.

You even have to more then double the Euro gold price to cover the physical notes in circulation.

If you take a more conservative gold standard encompassing M2 which in Europe encompasses M2 you get a even larger number........

The Euro is a hyperinflationy dog - the ECBs function was solely designed to transfer wealth to the ruling classes via monetory hyperinflation and subsequent asset price inflation - enriching its clients.

Its going down baby - the malinvestment has been epic in scale.

We have had no major war yet the west is finished - UNFUCKINGBELIEVABLE

Wed, 12/15/2010 - 20:04 | Link to Comment Spitzer
Spitzer's picture

who ever hyperinflates first loses.

My bet is the dollar, look at the swap lines to the ECB and the bailouts from the IMF. Looks like dollars are getting printed to me, not Euro's

Wed, 12/15/2010 - 20:19 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Whether the money is lost on a via default or is hyper inflated into infinity it needs Gold on the other side of the balance sheet.

In the great scheme of things it does not matter wether you do a Ben B or a Axel W.

The Loss was incurred when they made loans to non productive non capital forming ventures.

The west has been destroyed by monetarists that believe that money is not a energy token - they will be proven wrong.

The malinvestment has been epic - we had all the money for Holidays on the Med yet Nuclear power plants were too expensive as they were capital intensive so we ran down capital instead as in this system all money must be spent.

I have recently gone from bearish to uber bearish - the "authorties" either do not understand the problem or want the 4 horse men to come and finish it.

Wed, 12/15/2010 - 20:45 | Link to Comment Dr. Acula
Dr. Acula's picture

"money [is an] energy token"

That's stupid. Energy has no special place in the science of economics. The only thing dumber than your phrase is the absurdity called EROEI. It is impossible to grasp economics by playing childish games with physical quantities.

Wed, 12/15/2010 - 20:46 | Link to Comment Jasper M
Jasper M's picture

It can be argued that economics is a special case of ecology, which is, in turn, a special case of thermodynamics. So money Is an energy token, just with the details (unfortunately) overlooked.

Wed, 12/15/2010 - 22:07 | Link to Comment Dr. Acula
Dr. Acula's picture

To say $1 is an energy token because it can be traded for energy is specious. A unit of money can with equal justification be called a cheeseburger-token or tchotchke-token.

To say $1 is an energy token because the unit of currency contains energy is also absurd. Because then a $1 gold eagle would not be an energy token - there is no way to extract energy from them. Electronic money does not even have rest-mass energy.

Thu, 12/16/2010 - 04:54 | Link to Comment AnAnonymous
AnAnonymous's picture

To try to measure anything with money  is specious.

That is the issue. Money cant measure anything. That is where the problem is.

 

By the way, cheese burgers are energy.

Thu, 12/16/2010 - 17:53 | Link to Comment johan404
johan404's picture

Ok. How do any products get manufactured or services get provided without energy? If I put a $1 bill in my gas tank, will my car run on it? Money represents the ability to do work and produce goods, energy (oil) is the ability to do work and produce goods. You are clearly retarded and think industrial goods are made and transported with magical pixie dust, or you are a troll.

Wed, 12/15/2010 - 20:47 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

 I give up - but before the lights go out I must endeavor to buy some slaves while they are still cheap.

Tell me Dr.Acula  what is the name of the free energy planet that you hale from ?

Wed, 12/15/2010 - 21:35 | Link to Comment Dr. Acula
Dr. Acula's picture

>what is the name of the free energy planet that you hale from ?

It's called Earth. Energy is not "free" here (despite the infinite EROEI of the sun which continuously emits unimaginable amounts of energy at a distance of 93M miles without me having to do anything). It seems that scarce energy is distributed here using an ever-changing price system - wherein energy-containing goods and other scarce goods, like cheeseburgers and dentifrice, are exchanged at various market-clearing ratios ultimately based on people's subjective valuations.

If you are so worried about energy, you should stop using the bathroom. Taking a dump is a very low EROEI process, where one must extert large amounts of energy producing something that is practically useless (unless you also burn your own dung). Clenching one's sphincter is an excellent way to conserve energy and save humanity.

 

Wed, 12/15/2010 - 21:47 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

At Dr.Acala.

first you question that money is a token of energy yet to be used and now you admit the goods exchanged for these tokens are scarce and contain stored energy created via human ingenuity.

your lodgic is strange to me.

Market clearing ratios and subjective valuations are just complicating matters.

I have a great urge to take possession of Catherine Zita Jones yet lack the necessary value tokens to care for such a high maintence piece of work.

Such is life.

You seem to have no concept of capital creations role in energy creation - many confuse energy economists with depletion economists who just want to slow the process of depletion down.

That is not however how true capital is created.

Constructive capitalism is when financiers provide capital for capital growth such as early Dutch wind farms to create land and not depletion speculation in Tulips which runs the wealth previously created down.

No I am arguing for peasants to build efficient stoves so that the surrounding forest can photosynthesize faster then its harvesting.

Essentially net energy positive actions otherwise known as capital growth.

I get the feeling that you just don't get it or maybe you are just another troll who wants to project his anal retentiveness to the wider world via a imaginary binary character.

Wed, 12/15/2010 - 21:59 | Link to Comment Dr. Acula
Dr. Acula's picture

>you admit the goods exchanged for these tokens are scarce and contain stored energy created via human ingenuity.

When I go to a movie theatre, I exchange "tokens" for an enjoyable experience, not for receiving stored energy. I eat popcorn because I value eating it more than I value having $5 - not because it's the food of optimum energy density that I can obtain. I guess you think one only goes to the movies for the privilege of being showered with energetic photons and accoustic waves. Your obsession with energy has no relevance to economic science - the science of everyday human action.

>Market clearing ratios and subjective valuations are just complicating matters.

Foundational concepts in economics are "complicating"?

>I am arguing for peasants to build efficient stoves so that the surrounding forest can photosynthesize faster then its harvesting.

If I am a peasant and I want to burn up all the wood on my land, then it's none of your damn business. As wood becomes more scarce, the price of wood will rise. The price rise will be increased further as shrewd speculators act to speed the market toward equillibrium. I will have to start using blankets because I won't be able to afford the wood: the wood will be conserved automatically without any of your hand-wringing. If you are smart, you will be like Weyerhauser and plant new trees continuously and sell me all the extra wood you grow at a great profit that allows your tree-growing operation to expand.

Wed, 12/15/2010 - 22:06 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Again you are personalising your experience to make a point rather then a Jibe - I do not care what you enjoy doing - this was not the basis of my argument.

You are engaging in the classic evasion of changing the basis of the discussion.

As for the second remark you are displaying the attitude of a Blaggard and capital destroying speculator - if you were in my village I would run you out.

Any noble Knight would rightly recognize you as a Barbarian and run you through.

Wed, 12/15/2010 - 22:21 | Link to Comment Dr. Acula
Dr. Acula's picture

"You are engaging in the classic evasion of changing the basis of the discussion."

I'm not sure what the discussion is about any more honestly. Other than you coining nonsense terms like "energy token" and then complaining that someone has the audacity to consume more energy in their patch of forest than is absorbed through photosynthesis.

"you are displaying the attitude of a... capital destroying speculator"

Speculators speed the market to equilibrium and are rewarded (or punished) by the market based on their success (or failure) at doing so. I can see how someone misunderstands the role of speculators though, when they find economics 101 principles to be "complicating".

"Any noble Knight would rightly recognize you as a Barbarian and run you through."

It sounds like you advocate murdering someone for the crime of burning too much of their own wood. Perhaps you should control how other people use their own firewood. Innumerable market participants performing voluntary exchanges and entrepeneurial planning can't rationally decide how to use wood without your wise intellect and angellic intentions controlling them. You should be the Wood Czar.. err Cork Czar.

 

Wed, 12/15/2010 - 22:22 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

You want to destroy woodland to drive up the price of wood , not to plant crops - on a larger scale this would be similar to destroying oilfields in the Gulf of Mexico to drive up the oil price.

If you do not see the vandalism in this action then you are a seriously fucked up Baby.

Those bed time Ayn Rand stories are only stories you know - its not real life.

You have to share life with a community and that community must respect your individuality unless you are a maniac arsonist hell bent on destruction.

Thu, 12/16/2010 - 00:58 | Link to Comment Dr. Acula
Dr. Acula's picture

>You want to destroy woodland to drive up the price of wood

I don't understand how you got that idea; I was suggesting that someone who owned part of the forest might foolishly burn all their wood for their comfort without planting anything or planning for the future. But, fortunately, there are a lot of entrepeneurs attracted to profit opportunities that will step in to do the planting for them. Commercial forestry companies do a very good job of planning for the future and planting on their lands. My point is that freely acting people working in the framework of a market economy can solve a lot of problems that no single person can manage; I suggest reading this as it is rather eye-opening and entertaining: http://www.econlib.org/library/Essays/rdPncl1.html

>If you do not see the vandalism in this action

Again, I think you misunderstand me. It would in any case be foolish to vandalize the forest and destroy it. Even the dumbest entrpeneur might cut down all the trees on their land without replanting but they would at least sell off the wood rather than waste it outright.

And of course, if the land does belong to someone then I think you have no right to tell them how to use it. Who knows, maybe they are studying forest fires?

 

Wed, 12/15/2010 - 22:25 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Duplicate post

Wed, 12/15/2010 - 22:24 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Duplicate post.

Wed, 12/15/2010 - 23:12 | Link to Comment robobbob
robobbob's picture

DoC is doing a great job without me, but I think perhaps a simple direct approach is in order.

Your little slips of paper only have value to anyone because they know that you can trade them in for stuff. Stuff that has as part of their underlying cost, the effort required in making it. That effort required a certain expenditure of energy. Sure, there are variables attached, risk analysis and so forth that keep it from being a straightforeward linear connection, but in the end, value of your paper equals the amount of energy someone is willing to expend in exchange for it.

Simplified: money is a measure of energy.

In real science, theory is created to model reality. The grand masters of financial alchemy believe theory creates reality. It is the failure of modern popular economic theories to accept the fact that economic systems are a manifestation of physical reality, not the cause of it, that has brought the system to the brink of collapse.

 

Thu, 12/16/2010 - 01:12 | Link to Comment Dr. Acula
Dr. Acula's picture

"Simplified: money is a measure of energy."

Are you kidding? A lump of coal might have the same exact chemical energy as that of a cheeseburger when burned. Yet one costs $1 and the other $5. Money does not measure energy. There is no objective means to convert from $ into Joules or vice versa.

Furthermore, money does not even measure value. The $5 in your wallet might have more or less subjective value for you than the $5 in mine has for me. But there is no way to compare two people's subjective valuations. Money can express prices, but it cannot measure.

Finally, when I buy a good, such as a piece of land, I am not exchanging money for "the amount of energy someone is willing to expend". I am exchanging the money for the good. I can expend a lot of energy in the bathroom and not even the most ardent support of the fallacious Marxist labor theory of value will pay anything for my faeces.

"In real science, theory is created to model reality." - Yes, this is the case with praxeology and the Austrian School of economics.

"The grand masters of financial alchemy believe theory creates reality." - More accurately, it's a bunch of pseudoscientist shills playing childish games with numbers. The problem is that economics is influenced by Big Money and politics. It abounds with fraudsters and crackpots. Per Henry Hazlitt http://www.hacer.org/pdf/Hazlitt00.pdf

"The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine—the special pleading of selfish interests"

 

Wed, 12/15/2010 - 21:56 | Link to Comment ATM
ATM's picture

Brilliant!

Cork......Must have a little Murphy in ye!

Thu, 12/16/2010 - 05:42 | Link to Comment AnAnonymous
AnAnonymous's picture

despite the infinite EROEI of the sun which continuously emits unimaginable amounts of energy at a distance of 93M miles without me having to do anything

 

That is blatantly false.

To acquire solar energy, you need to spend energy. This includes performers like plant lifes we are far behind of.

Apparently, in your world, acquisition of energy is a given that requires no spending of energy. Leading to your consideration that the Sun has an infinite EROEI.

Wed, 12/15/2010 - 20:40 | Link to Comment Spitzer
Spitzer's picture

I agree with  most of what you say.

I am just saying, people are under-estimating how the Euro system will work during a dollar crisis.

Wed, 12/15/2010 - 20:58 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

The tribal instincts of the drones will complicate matters - I am still preprogrammed in a nationalistic manner - the euro babble has had not enough time to sink in. 

www.youtube.com/watch?v=jjt02wrmML0

 

Wed, 12/15/2010 - 21:39 | Link to Comment IQ 145
IQ 145's picture

 I like your take on things. It makes sense to me.

Wed, 12/15/2010 - 20:25 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

What is the ECB trading for dollars ? rocks .... ?

Wed, 12/15/2010 - 21:32 | Link to Comment tmosley
tmosley's picture

Can you get at the ECB's gold with Euros?  I have never heard of anyone being able to do that.  If you can, at what price (ie spot+/-X)?

Wed, 12/15/2010 - 19:15 | Link to Comment doolittlegeorge
doolittlegeorge's picture

"if you're out of money you can't buy PM."  Read the "news out of Vienna vis a vis Madoff."  He had a "body double" apparently. in other words as i've referenced vis a vis Randy Newman the Eurolanders are following "Albert Einstein and catching that train to Switzerland."  OF COURSE nationality will win out in the near term (through riots OF COURSE as well.)  Let us not "over dramatize."  We haven't even made it to revanchism yet!

Wed, 12/15/2010 - 19:23 | Link to Comment chet
chet's picture

I think you're looking at the wrong part of the pair.  PM isn't going down with the Euro, it's going down against a stronger dollar.

Wed, 12/15/2010 - 19:27 | Link to Comment Orly
Orly's picture

Going down on higher US bond yields.  Gold doesn't pay interest.

Wed, 12/15/2010 - 20:05 | Link to Comment Spitzer
Spitzer's picture

yes, but gold does not default.

Wed, 12/15/2010 - 20:31 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Gold can't buy you grains,oil,on the open market, you cant trade forex with gold, spitz go to bed if your game is this weak. And the second you convert that gold into dollars/euros/yuan you have entered uncle ben sholom's global dollar denominated game .... He wins.

 

All the new loans every day. All the new juice from all the new loans after 2007 ~ aka -armageddon....

Wed, 12/15/2010 - 20:47 | Link to Comment Spitzer
Spitzer's picture

jeeesus

Dollars have NO YIELD unless you lend them out AND unless there is a real inflation adjusted return(which there is not)

Gold does have a yield when you lend it out. (central bank gold swap rates)

You can exchange gold for any fiat currency in the world and then you can buy your oils and grains. But you cannot exchange Rubles, bahts or even US dollars for any currency in the world.

Wed, 12/15/2010 - 21:13 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Whats the rate the ECB pays ben for dollar loans ? What the juice on the global debt in dollars. Every single country trades in dollars.... They want oil they need dollars, you want to trade on a global scale its in dollars , wake up spitz' its not hard.

 

You keep living in what if land, ecb will do this some day ... Its all bullshit. The dollar is the global reserve currency, please study up on the pros and cons of this global game. Its going to run the same way tomorrow. Unless we get a global reset then its by,by debt's....

Wed, 12/15/2010 - 20:53 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Let them eat gold pie.

 

Wed, 12/15/2010 - 21:35 | Link to Comment tmosley
tmosley's picture

Fed: Let the eat a Turd Burger, or a Shit Sandwich.  It's their choice.

Wed, 12/15/2010 - 21:52 | Link to Comment IQ 145
IQ 145's picture

 You're pretty funny. you can't trade forex with gold; ehh? what a shame, and I so much wanted to do that, too.

Wed, 12/15/2010 - 20:43 | Link to Comment Amish Hacker
Amish Hacker's picture

Higher nominal  US bond yields. Inflation-adjusted, bonds still don't look like such a good deal. And why would gold pay interest, since there's no counterparty risk---assuming you're holding the physical yourself.

Wed, 12/15/2010 - 21:43 | Link to Comment IQ 145
IQ 145's picture

 I guess we'll just have to wait and see.

Wed, 12/15/2010 - 19:30 | Link to Comment Alex Kintner
Alex Kintner's picture

Yeah, good question. Then next question. For GLD shares, if HSBC (The Custodian of GLD) goes belly up, will GLD shares turn to dust? The perspectus says GLD is insured, but I hope the hell it ain't AIG doing the insuring.

And will somebody please show NIC how to use a spel checkr?

Wed, 12/15/2010 - 19:01 | Link to Comment divide_by_zero
divide_by_zero's picture

Speaking of civil war, that shooter in Florida left some interesting stuff on FB apparently;

"My testament: Some people (the government sponsored media) will say I was evil, a monster (V) ... no ... I was just born poor in a country where the Wealthy manipulate, use, abuse, and economically enslave 95 percent of the population. Rich Republicans, Rich Democrats ... same-same ... rich ... they take turns fleecing us ... our few dollars ... pyramiding the wealth for themselves."

 

The page also uses a quote from billionaire Warren Buffett in the New York Times in 2006: "There's class warfare, all right, but it's my class, the rich class that's making war and we're winning."

 

http://www.cbsnews.com/8301-504083_162-20025729-504083.html

Wed, 12/15/2010 - 19:12 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

If this guy was a true hero, the same government sponsored media he despised would not being reporting his case right now all across America. True revolutionaries are ignored and fought.

Warren Buffet, the New York Times, CBS News, the three are socialist. And the death of this guy will feed socialist propaganda. "You see, the poors are driven to suicide by capitalism".

Rest assured that the MSM in America will not denounce the real problem: bankers, socialism, and the monopoly in the emission of money.

Wed, 12/15/2010 - 19:14 | Link to Comment AnAnonymous
AnAnonymous's picture

That could make sense if capitalists were known to care about the death of one man...

Wed, 12/15/2010 - 19:17 | Link to Comment doolittlegeorge
doolittlegeorge's picture

some say "they do.  but...

Wed, 12/15/2010 - 19:38 | Link to Comment Alex Kintner
Alex Kintner's picture

Golden rule of news: If it bleeds, it leads.

The news reports I have seen don't mention his class warfare manifesto. They simply portray him as a nut case instead of someone driven to desparation.

Wed, 12/15/2010 - 20:20 | Link to Comment Bob
Bob's picture

Well, he didn't hold up very well against the School Board.  He shamed my avatar as well . . .

Wed, 12/15/2010 - 20:33 | Link to Comment Alex Kintner
Alex Kintner's picture

Ha, the avatar. You probably just made the 'No fly' list. :-)

Wed, 12/15/2010 - 21:32 | Link to Comment I Am The Unknow...
I Am The Unknown Comic's picture

Dude, thanks for posting.  When I saw the video and what he spraypainted on the wall, I thought oh shit I hope that's not one of ours on ZH.....

I knew it was highly doubtful, but one never knows.  We (myself included) do let off quite a bit of steam around here... 

Wed, 12/15/2010 - 21:54 | Link to Comment Jendrzejczyk
Jendrzejczyk's picture

LOfuckingL, you were the first one I thought of when I read that.....hoping it wasn't you.

Wed, 12/15/2010 - 22:38 | Link to Comment Bob
Bob's picture

And, watching that pathetic character parading around on MSM teevee all day, I wondered if DHS got him from central casting.  Anybody seen a body? 

C'mon, a frickin' School Board meeting?!

What a cuntry.  Even the nut jobs have gone to hell.

Wed, 12/15/2010 - 22:59 | Link to Comment Jendrzejczyk
Jendrzejczyk's picture

At least a Mayor, right?

Wed, 12/15/2010 - 23:52 | Link to Comment Cursive
Cursive's picture

What about johngaltfla?  He's got the Vendetta avatar, too, AND he may be from Florida.  BTW, is it me, or was anyone else horrified at the pussies on the school board panel.  They were all just sitting there like deer in the headlights, waiting to be slaughtered.  The "leaders" in this country are basically cardboard props.  This Depression is going to expose a lot of pathetic dumbasses.

Thu, 12/16/2010 - 00:54 | Link to Comment Bob
Bob's picture

It was sad to see that a woman would double back for a head shot with an empty purse and nobody seized the opportunity--they were like cows.

Of course, it always amazes me that crowds of people surrender to laying on the floor en mass to be murdered.  I mean, WTF?  First, the guy is massively outnumbered and, second, if you don't rush him you're surely gonna die.

I've taught my girls to do that math. 

Good question about johngalt.  I trust that DHS has somebody assigned to ZH--wouldn't it be nice if we could just call our DHS Rep up for answers to our questions? 

Thu, 12/16/2010 - 09:31 | Link to Comment Cursive
Cursive's picture

@Bob

Agreed.  BTW, johngaltfla was posting last night.

Wed, 12/15/2010 - 21:58 | Link to Comment RockyRacoon
RockyRacoon's picture

At some later date there may be too many to report except in a day's grand total.   The sansculottes will increase in number and power... and visibility.

Wed, 12/15/2010 - 23:17 | Link to Comment Jendrzejczyk
Jendrzejczyk's picture

Hey Rocky,

Thanks for the advice a few weeks back. My new therapist is now totally freaked by the reality facing us and wants to meet the "magical internet raccoon".

Sat, 12/18/2010 - 12:26 | Link to Comment RockyRacoon
RockyRacoon's picture

Tell your therapist that as a professional discount I'll only charge her/him $250 an hour.

Wed, 12/15/2010 - 19:39 | Link to Comment tsx500
tsx500's picture

wow,interesting.   funny how i didn't see this little factoid  anywhere in the MSM !   they musta 'missed it'  . . . . . . . . . .

Wed, 12/15/2010 - 20:47 | Link to Comment samsara
samsara's picture

I was just born poor in a country where the Wealthy manipulate, use, abuse, and economically enslave 95% of the population 

 

MarketTicker had a good one on it with the quote.

When The Government Refuses To Enforce The Law..... http://market-ticker.org/akcs-www?post=175045

"Where is the breaking point for the citizens in the general case?  Not one disturbed man, but the majority of men and women? "

Wed, 12/15/2010 - 21:57 | Link to Comment IQ 145
IQ 145's picture

 Many of the "wealthy" were born poor also; but they weren't stupid ignorant and lazy so they didn't stay that way.

Thu, 12/16/2010 - 00:03 | Link to Comment Who is John Galt
Who is John Galt's picture

So what is your excuse?

Wed, 12/15/2010 - 21:08 | Link to Comment Ham Wallet
Ham Wallet's picture

Didn't look like the "rich" skimmed any calories from that fat fuck.

So he hates rich people, therefore he goes after a school panel, he was stupid as well as fat.

 

Wed, 12/15/2010 - 19:01 | Link to Comment rsi1
rsi1's picture

step 1) fiscal consolidation/homogeinzation and centralization across Eurozone.

step 2) keep current status of uncertainty for as long as possible, so the EURUSD does not go up to damage EZ exports

step 3) when panic hits and it will, be ready to sign up for eurobonds, as long as step 1 is kind of done or in the process

Wed, 12/15/2010 - 19:03 | Link to Comment rsi1
rsi1's picture

My view: Nobody will fail, this has been the message everywhere in the world, and nothing has changed since LEH, and unlikely to change in the future. Any problem that has to do with paper, can always be patched or solved with paper if you have a printing press.

Wed, 12/15/2010 - 19:52 | Link to Comment breezer1
breezer1's picture

thats the beauty of physical.

Thu, 12/16/2010 - 09:18 | Link to Comment Calmyourself
Calmyourself's picture

That's fair in an absolute sense.  What happens when paper is no longer trusted in a day to day transactional sense?  Even the slowest of the sheep may distrust the FRN's in his wallet then what?

Wed, 12/15/2010 - 19:02 | Link to Comment RobotTrader
RobotTrader's picture

Right now, we have to assume that SPY, GLD, USO, FXE are all the same trade.

If the Euro goes down in flames like Nic says, then gold is going to get decimated and "Peak Oil" will be a distant memory.

Wed, 12/15/2010 - 19:10 | Link to Comment Orly
Orly's picture

Now, you're catching on.  Watch the yield on the UST 10-year.

Wed, 12/15/2010 - 19:15 | Link to Comment erik
erik's picture

Orly, you short the EUR-USD again?  I have a short in place, but not nearly as much as I'd like to have considering I was hoping for a move to ~1.35-1.36 before the selling re-commenced.

Wed, 12/15/2010 - 19:31 | Link to Comment ZeroPower
ZeroPower's picture

13500 was indeed hit (just scraped) at am of the 14th. p/a going down was pretty clear too..

Wed, 12/15/2010 - 19:47 | Link to Comment erik
erik's picture

I was hoping to enter big at closer to ~1.36 since it was a 50% re-trace level.  Thus, the scrape of 1.35 wasn't sufficient for me to go big (unfortunately).  So the rest of my position was filled out by SPXU after the FOMC announcement yesterday.  That is a temporary holder though for future good EUR-USD entries, should they materialize.

As long as those crisis EU country bond yields are going up, the Euro should be trending down.

Wed, 12/15/2010 - 19:36 | Link to Comment Orly
Orly's picture

Yes, still short from after the close yesterday. The pair easily blew through a newly established trendline and is now headed firmly to the lower Bollinger Band @~ 1.3137.  It should reach that level easily and should get there in the European session or early in the US session tomorrow.

Since it has fallen directly from the Fibonacci level @ 1.337, I expect the pair to pop out of the bottom (slightly overshoot...) the lower Fibolevel @~ 1.30703.  I have placed my stop there.  I can easily adjust it, of course, if the trade doesn't meet my expectations.

After that, the EURUSD will be a bouncing ball before continuing lower.  Once we have a known level established, I should be able to calculate the yo-yo range, just in time for a nice Christmas package to trade over the holidays and into the first of the new year.

:D

Wed, 12/15/2010 - 19:55 | Link to Comment erik
erik's picture

Good to hear.  I am holding my EUR-USD trade longer term (since it is smallish) with expectations of ~1.15 by April/May of next year.  I know there'll be plenty of fight around ~1.25-1.26 and ~1.20; however, the descending wedge formation that started in mid-2008 is compelling technically, mixed with the aforementioned rising EU bond yields.

Wed, 12/15/2010 - 20:26 | Link to Comment Orly
Orly's picture

Erik, my friend, I think you understand 4X trading.

:D

Wed, 12/15/2010 - 21:24 | Link to Comment bbtrader
bbtrader's picture

On a monthly chart the Euro is on a long-term sell signal, and if one wants to discuss individual bars, then November's outside reversal is proof enough that there's more downside.  But there's going to be support around 1.225 - 1.250 area.  If it convincingly breaks that then we're talking serious drop.

Thu, 12/16/2010 - 02:31 | Link to Comment ZeroPower
ZeroPower's picture

Since it has fallen directly from the Fibonacci level @ 1.337

Haha.

(sorry, i had to!)

Wed, 12/15/2010 - 21:14 | Link to Comment RoRoTrader
RoRoTrader's picture

Robot; Right now, we have to assume that SPY, GLD, USO, FXE are all the same trade.

Orly; Now, you're catching on.

That's pretty saucy, Orly. Especially since you have been calling that trade at least since 1150 S&P, and 6200 DAX.

Question is if you see the correlation why didn't you ride it up since it is just the flip side? Or you are dogmatic and don't use stops because you trade across such wide time frames..........

Wed, 12/15/2010 - 22:41 | Link to Comment Orly
Orly's picture

Please don't forget that we're not dealing with headlines like Uncle Bob's Pancake House is being downgraded.  No, it's Spain.  Ireland.  They're saved.  No, they're not.

The difference here is that the Fed may have lost control of bond yields.  That could be seriously bad.  I had never heard of a POMO or a Repo 105 before trying to trade this market.  I am as confused as anyone regarding the fundamentals but the charts always tell the story- mostly.

I am doing my best!

P.S.  About stops...

Yes, it is all about finding a trend or a retracement and then following it back.  I watch for extremes being made in the Daily and then trade against the big move.  Usually, if you give it enough time to develop, stops are not necessary, especially when you wait for a confirmation candle to affirm the trade.  Of course, you have to watch the it at first but after that, you should be able to let it go and check the four-hour chart occasionally for possible reversals.

It seems like my stop-losses always get taken out, like there is some kind of magic wand that allows my broker to go up and grab my stop, even if it is ten-pips out.  Then, when you have a take-profit set, they will allow the pair to bounce all around it until someone finally takes a winning trade off your hands.  I think this is a disservice to traders but it is the reality.

Trailers are okay (trailing stops...) but they also limit your profit potential by not allowing the trade to run its full course.

Wed, 12/15/2010 - 23:27 | Link to Comment RoRoTrader
RoRoTrader's picture

You are very nice Orly, and yes, you try your best, but.......you are fired.

Wed, 12/15/2010 - 22:01 | Link to Comment IQ 145
IQ 145's picture

 She's catching something alright; but I don't think it's "on".

Wed, 12/15/2010 - 19:11 | Link to Comment SheepDog-One
SheepDog-One's picture

If the Euro is going to crash too, people for years wont even remember what markets, gold, bonds, were. Mad Max bitchez.

Wed, 12/15/2010 - 19:12 | Link to Comment erik
erik's picture

GLD dropped early then re-gained losses during the last sustained USD move up from Dec 2009 thru June 2010.

USO was choppy during that timeframe until it sold in the May correction.  SPY mostly did the same.

FXE is the most trustworthy of the downside trades.  Its fundamental situation is clearly getting worse.

Wed, 12/15/2010 - 19:19 | Link to Comment doolittlegeorge
doolittlegeorge's picture

"he is intelligent, Captain..but inexperienced.  His pattern indicates two dimensional thinking...

Wed, 12/15/2010 - 19:37 | Link to Comment Orly
Orly's picture

All Stop.

Wed, 12/15/2010 - 20:01 | Link to Comment Strider52
Strider52's picture

Z minus 10,000 meters...(from memory)

Wed, 12/15/2010 - 20:35 | Link to Comment Orly
Orly's picture

Yeah, and I always thought that was weird, "meters."  I thought they stopped using that measurement over a century ago.

Wed, 12/15/2010 - 19:21 | Link to Comment Spitzer
Spitzer's picture

 Euro = Toilet Paper.

    Something a 3rd grader can understand ......

Looks like the market is doing its usual, and steering everyone in exactly the wrong place.

What the world needs now is recapitalization through true, international liquidity. The kind that can only come from the MTM revaluation of true reserves. And when I say needs, I am talking about the kind of need that is a constant, not a variable. In other words, it is a fixed need that all other variables must, will and do conform to, one way or another, manipulated or not.

The real world is undergoing recapitalization through austerity and savings, the old fashioned way. And the commercial banking system is recapitalizing the newfangled way, by taking on unlimited debt liquidity(US dollars) and leveraging it to look good on the surface. And the central banks are prepared for whatever comes. As their dollar foreign reserves go up in smoke, their gold reserves will more than replace any lost value. And as this happens, that gold percentage will rise from 30% to 65% to 90+%.

As a bit of corroborating evidence, I would again point out that the European’s quarterly MTM revaluations on June 30 took place in a distinctly favorable environment — with gold prices residing near record high levels, thus allowing the gold portion of the European central banks’ reserves to strengthen the books at this critical juncture with a chart-topping €65.4 billion quarterly gain.

Wed, 12/15/2010 - 19:29 | Link to Comment doolittlegeorge
doolittlegeorge's picture

then there's the "old old way."  having now "run your little country out of bizzness we're now going jack up the rates."  Mellon?  This one has the feel of a certain Oyster as they say.

Wed, 12/15/2010 - 19:47 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Spitz' you have been dryhumping the euro for 6 months. Look down, no floor.

1#- rate for all Bitchez !!! Never going to work.

Euro = Deathbed.

 

* Please look up German inflation/EU. Tyler will post about this in the future ... Also pull a 7-10 year dollar chart. What crash after all the new debt .....?? A monkeyhammer for Gonzo Lira & Spitz'.....

Wed, 12/15/2010 - 19:48 | Link to Comment Spitzer
Spitzer's picture

hahaha

Its just the opposite, the dollar has no floor. Here, look at the first thing on the asset side of the ECB balance sheet.

http://1.bp.blogspot.com/_cvdgPlEKW9k/TEPsSuURVkI/AAAAAAAABSo/_vm6_YAwhh...

Wed, 12/15/2010 - 19:59 | Link to Comment erik
erik's picture

sure wish they would break down the number difference between "gold and gold receivables".

i maintain that an EU that survives default/restructuring will be the ultimate safe haven after the storm, especially if the US keeps printing as their solution.  however, i have serious doubts about EU solidarity given the gravity of the debt situation and counter-party risk.

Wed, 12/15/2010 - 20:10 | Link to Comment Spitzer
Spitzer's picture

i maintain that an EU that survives default/restructuring will be the ultimate safe haven after the storm

I agree, it will get ugly for everyone, including the ECB

Wed, 12/15/2010 - 20:09 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Riddle me this .... Who needed trillions of dollors via swaps over the last 2 years ? 8 Trill ... the lil' wanker bankers goooo boom.

ECB- Ben we need dollars.

Ben- How much ?

ECB- 8 Trillion.

Ben- O.K.

ECB- Ummm. when can you send it.... ? Ummmm

Ben- I'll wire it after glee is over & monday night football.

ECB- Uh... o.k....

Ben- Dont forget your paying your juice in gold.... My euro bitchez.

 

"Fat Ben"..... lean back ... lean back. Do the rockaway''''''' now lean back ....

Wed, 12/15/2010 - 20:13 | Link to Comment Spitzer
Spitzer's picture

The same people that extorted trillions of dollars via swap lines over the last two years.

 

Wed, 12/15/2010 - 20:15 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Ben never beg's. Hes the godfather.

Euroland = ugly/sic' leverage. Mad credit ....

Wed, 12/15/2010 - 20:53 | Link to Comment Spitzer
Spitzer's picture

Euroland is a net creditor. Ever thik of that ?

Wed, 12/15/2010 - 21:06 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

For who Ireland ? Why did they need 8 trillion ? Ben has an 8 color lexmark with rivers of cyan & magenta. He also has a super computer & the only key to start it.

Wed, 12/15/2010 - 21:21 | Link to Comment Spitzer
Spitzer's picture

The ECB has a supercomputer too but they are too smart to start it.

Wed, 12/15/2010 - 21:24 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

2 weeks, book it.

Wed, 12/15/2010 - 23:58 | Link to Comment UninterestedObserver
UninterestedObserver's picture

LOL sure gold will get decimated when one of the most used currencies in the world fails - I would expect a correction*(maybe) but severely doubt that the destruction of a major currency is bad for PM's

Wed, 12/15/2010 - 19:03 | Link to Comment Paul Thomason
Paul Thomason's picture

Now the Euro is going to crash too?.  

Everything is crashing according to Nic - the only thing is that this preeiction will be proven wrong as with your other predictions.

You are the Julian Assange of your followers' wealth - you may well be the worlds most dangerous man.

Wed, 12/15/2010 - 19:11 | Link to Comment SheepDog-One
SheepDog-One's picture

So the Euro will be fine then? LOL.

Wed, 12/15/2010 - 19:22 | Link to Comment Spitzer
Spitzer's picture

Not fine, but it will be the reserve currency of the world.

Wed, 12/15/2010 - 19:28 | Link to Comment SheepDog-One
SheepDog-One's picture

'Bancor'

Wed, 12/15/2010 - 19:32 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Lmao. I've never seen a thing so funny on ZH since I'm here.

Maybe my point of view is different than yours because I am French and I was born in France.

But expecting the euro to survive is bullshit. Europe is in far worse shape than the USA. And I'm trying to be the most objective here. You have no idea how much Europe is fucked.

Wed, 12/15/2010 - 19:54 | Link to Comment Spitzer
Spitzer's picture

Stop laughing, I didn't think I would say it either.

Europe is a NET CREDITOR. Seen the US trade deficit lately ?

You have no idea how fucked the US is.

I explained it a few posts before this. We are talking about the Euro currency, not the health of the European commercial banks.

Wed, 12/15/2010 - 21:13 | Link to Comment Ham Wallet
Ham Wallet's picture

Do you mean the Euro as is will be the Reserve Currency or a restructured Euro, something like a Nordic (Germany, Norway, Sweden etc.) backed Euro, which has been suggested on some articles i've read, will emerge?

Wed, 12/15/2010 - 22:16 | Link to Comment Spitzer
Spitzer's picture

Gold will be the reserve asset that countries would balance their trades and hold as reserves but the Euro will be the currency that things are priced in. It will have to be the Euro. There is nothing else.

Wed, 12/15/2010 - 23:14 | Link to Comment kubrick007
kubrick007's picture

what is this based on? i read fofoa and they kind of spelled it out the same way 10 years ago with the freegold explanation. what i don't get is...who are the architects behind this? is this a matter of the dollar being an older currency and the euro being the newest large currency....and as a result the bankers finally figured out freegold? i mean seems like freegold is very logical and best approach to money.

 

i guess the question is: who is in charge of this transformation? is this something that has been pushed by saudi/oil and bankers or btwn american and european powers...i understand the idea but don't understand why corrupt leaders anywhere would choose something that they couldn't manipulate...

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