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In September Europe Must Issue Double The August Government Debt

Tyler Durden's picture


Summer vacation is over and things in Europe may soon start rocking and rolling all over again. Not only is France about to experience its first 24 hour general strike this Tuesday in a long time, which will likely remind everyone else in Europe (hint Greece and Ireland) that austerity is the new normal across the Atlantic and the 14th annual monthly salary is not going to come back just because nobody is talking about it, but as the FT reports Europe needs to issue double the amount of debt in September compared to August. From the FT: "Eurozone governments will try to raise €80bn ($103bn) in
September compared with new bond issuance of €43bn in August. Spain is
expected to attempt to borrow €7bn in September compared with €3.5bn in
August, according to ING Financial Markets." The dramatic ramp up in issuance is forcing the FT to speculate that "some of the weaker economies could fail to
raise the amount of money they need as eurozone governments attempt to
issue double the amount of debt this month compared with August." For all those who have been waiting for the perfect storm in Europe to finally develop the time of waiting may be over.

More from the FT:

Padhraic Garvey, head of rates strategy for developed markets at ING Financial Markets, said: “We are heading into a critical period as the chances rise that a government may fail to raise the money it needs.

“Spain, Portugal and Ireland are the obvious ones to worry about. Are investors willing to stay long, or buy the debt of these countries? I’m still not seeing investors willing to buy into the periphery.”

Some strategists say the return of most investors from holidays this week could increase volatility in these markets because many have put decisions on their portfolios on hold during the summer.

With most investors back at their desks, some could start selling peripheral debt in the coming weeks, particularly as the outlook for the global economy has deteriorated. In spite of some better than expected data out of the US last week, worries about a double-dip recession have increased.

But other strategists insist governments will have little difficulty in funding themselves, even if they have to pay higher premiums or yields to attract investors. They say countries such as Portugal and Ireland have already raised most of the money they need this year.

Government bond yields of the peripheral countries, however, may come under further selling pressure.

Expect the stock market to begin acting even more deranged over the next three weeks, now that the Fed has to perform double duty to make sure that all the upcoming auctions don't clog the system to a halt, and the realization that Europe has been bankrupt all along in 2010 isn't comprehended by too many of the "naifs."


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Sun, 09/05/2010 - 18:28 | 565123 Spitzer
Spitzer's picture

Why don't they just issue IOU's ???

Then the Euro should go up.......and interest rates should come down.

But seriously folks, why the fuck does everyone call Europe's bluff and not the US'es?

Sun, 09/05/2010 - 18:50 | 565154 Conrad Murray
Conrad Murray's picture

Because it's better to keep playing the game and get 2.5-3.5%, than to try to call the bluff and get shot.  Also, because the money-changers are using the US for their base currently, and until they can hustle up a new, global scam, it's in their best interest to keep the lower fruit destabalized.

Sun, 09/05/2010 - 19:06 | 565169 Spitzer
Spitzer's picture

I still think there is allot of brain dead money out there and if enough of them come to their senses, the game will be over, regardless what the money-changers do.

Sun, 09/05/2010 - 21:45 | 565308 New_Meat
New_Meat's picture

No. 9-all brain dead, but we have to think about the "prudent man" and "fiduciary" and criticism if things don't be compared with their respective "index."

- Ned

Sun, 09/05/2010 - 20:48 | 565259 Calmyourself
Calmyourself's picture

Thank you Conrad Murray!  Exactly, no one is going to pull out completely and let this system go down no matter how much you want to take the bitter medicine now.   ZH'ers are not the people you see o nthe street or the people at work.  We are the most informed and probably intelligent percentage out there (myself excluded) and what we want is not what the mass of people will strive, work and probably kill for; the continuation of the system.


Until Governments that matter around the world agree on the system to keep the PTB in power after the reset there will be no reset..

Mon, 09/06/2010 - 00:20 | 565440 Spitzer
Spitzer's picture

It doesn't matter if they want the system to survive or not, it can still go bust.

Mon, 09/06/2010 - 11:00 | 565717 Calmyourself
Calmyourself's picture

I do not believe it can go forever but it will last much, much longer than we want it too.  The psychological factors are not being taken into account.  The people with the ability to run out of bonds to commodities in large chunks know what happens if they do.  The illusion we are living and slow grind of deflation is preferable to the alternatives.  The other TBTF banks, hedgies etc all know what happens if it all goes down.  I NEVER want this to happen but I would rather take the pain hard and fast than have my children take it over the next 20-30 years.  However, quick pain and a reset kills TBTF and so if it happens it will only happen with Gov, TBTF and others all on board with an after action plan to remain in power.

This is going to be long, painful and drawnout the only alternative is to have this change imposed by the people and how likely is that?

Sun, 09/05/2010 - 18:49 | 565153 Horatio Beanblower
Horatio Beanblower's picture

AEP's latest...


"Dangerous Defeatism is taking hold among America's economic elites" -


Are you a dangerously defeatist American elitist?

Sun, 09/05/2010 - 19:12 | 565172 dlmaniac
dlmaniac's picture

"Are you a dangerously defeatist"


His eyes suffer such uncurable disease that they tend to see the reality as is.

Sun, 09/05/2010 - 19:14 | 565174 Spitzer
Spitzer's picture

his reason for concluding that it will not be worse is telling: the Fed will step in with $500bn to $750bn of fresh QE every six months if necessary.


Sun, 09/05/2010 - 19:58 | 565223 Everyman
Everyman's picture

Why do "dangerously defeatist American elitist" wear ties?


To hold the foreskin back.

Mon, 09/06/2010 - 11:29 | 565761 DosZap
DosZap's picture

Never happen Ambrose............

When EurOPA folds(and real soon, esp the EURO), we will see the same old shit.

Europa's will RUN to US Treasuries, and Bonds,(saf money ya know).

Propping up our ugly ass yet again, and likely running up PM's Yet again.

Which will happen anyway, as the Euro, and the PIGS continue to burn to the ground.

Someone stop this Merry Go Round........I want off.

Sun, 09/05/2010 - 18:57 | 565162 10044
10044's picture

stage is set for gold bitchez

you guys heard anything about a possible coup in Greece around sep 20?

Sun, 09/05/2010 - 19:49 | 565206 flacon
flacon's picture

No I haven't. Tell more please. Greeks are famously late/slow.

Sun, 09/05/2010 - 23:26 | 565388 Oracle of Kypseli
Oracle of Kypseli's picture

If there is one, it will be orchestrated by the ruling elite. A good excuse to default and start over and a good way to keep the left from revolting.

The rest of the world would boycott the generals and a few years later they will call for elections with the same "Dramatis Personae"

The effect of the sound-waves across Europe are difficult to predict even for an oracle.

Perhaps a few French banks will take a dive or bailed-out by Bernanke who suffers from "Pecunia Digitalis"

If you press me for a prediction I would say: "Ixis afixis ou thnixis em polemo"     

Sun, 09/05/2010 - 23:31 | 565393 Oracle of Kypseli
Oracle of Kypseli's picture

BTW: A currency ink producer (the special red needed for paper money) has revealed that the Drachma has been already printed and is ready to roll at a moment's notice.

Mon, 09/06/2010 - 04:48 | 565546 Troy Ounce
Troy Ounce's picture


Sun, 09/05/2010 - 20:20 | 565241 deadparrot
deadparrot's picture

I'm sure most coups are leaked on financial blogs.

Mon, 09/06/2010 - 11:37 | 565771 DosZap
DosZap's picture

"you guys heard anything about a possible coup in Greece around sep 20?"


No, but one will happen here in November............pity the fools that get elected.

How would you like to inherit this shit?............Oh, it's ok, they can blame it on Odumma.

Sun, 09/05/2010 - 19:02 | 565166 bugs_
bugs_'s picture


Sun, 09/05/2010 - 19:37 | 565198 Number 156
Number 156's picture

I thought the IMF was going to keep lending until they reach the lowest plane of hell, no?

Mon, 09/06/2010 - 06:59 | 565572 papaswamp
papaswamp's picture

I think the lending isn't enough...apparently 'austerity' costs more.

Sun, 09/05/2010 - 19:55 | 565217 hungrydweller
hungrydweller's picture

Big Ben will pick up the tab.

Sun, 09/05/2010 - 20:21 | 565244 ricksventures
ricksventures's picture

Why exactly do they need to raise double form Aug ??? Would someone please explain ?


Sun, 09/05/2010 - 20:32 | 565253 Goldenballs
Goldenballs's picture

Well lets see whats going to happen in September,Greece,Ireland,Portugal,Spain,Hungary all default,Iceland decides to not be a part of Europe and sets up as a Superpower with Greenland,Arnie puts California up for Sale,Pensions are cut by 50% in the Western World,China purchases 99% of all oil,wheat and metals for sale,and the outcome is yes you,ve guessed it .................... The DOW goes up by 500 points.  

Sun, 09/05/2010 - 20:55 | 565273 three chord sloth
three chord sloth's picture

I figure the larger, stronger (errr... relatively speaking) European countries will big foot their smaller cousins for the precious elixer (bond sales). The EU will likely begin the cannibalization process soon, fighting over ever rarer bond buyers.

The Greeks already called the Germans "Nazis"... I wonder what the Spaniards will call the French? The Portugese will call the Dutch? I expect a valuable lesson in cross-cultural insults will be forthcoming.

Sun, 09/05/2010 - 22:45 | 565367 Battleaxe
Battleaxe's picture

9/20 Greece coup, setting off a chain reaction.

Sun, 09/05/2010 - 20:58 | 565277 RobotTrader
RobotTrader's picture

What ever debt Euro needs will be floated with no problem, 300% oversubscribed.

Just as it has been now for the last 6 months.

The appetite for bonds remains voracious.

Mon, 09/06/2010 - 02:24 | 565501 Number 156
Number 156's picture

In your opinion, who would be the top 3 buyers?

Mon, 09/06/2010 - 10:44 | 565699 Phat Stax
Phat Stax's picture

Sovereign funds in the Middle East would be... they have the phat stax.

Mon, 09/06/2010 - 20:10 | 566398 doolittlegeorge
doolittlegeorge's picture

for Greek bonds?  I was under the impression they've been selling off all summer long....

Sun, 09/05/2010 - 21:09 | 565288 spinone
spinone's picture

Everyone should get used to running on the ragged edge of world financial disaster for the next 20 years.  We'll be constantly on the verge of it, but it will never happen.

Sun, 09/05/2010 - 21:50 | 565310 New_Meat
New_Meat's picture

Mrs. Smythe: "how do you make it last that  long?" - Ned

Mon, 09/06/2010 - 00:25 | 565444 Spitzer
Spitzer's picture

interest rates are at 0. It will happen soon enough.

Mon, 09/06/2010 - 02:28 | 565503 Number 156
Number 156's picture

I think the endgame is coming, but yeah, it will be awhile out.

Once it does come, it will be horrific and violent.


"The market can stay irrational longer than you can stay solvent"

Sun, 09/05/2010 - 21:19 | 565294 putbuyer
putbuyer's picture

Lets just get the shit storm over already. I love the latest at Contrary Investor.

"Here In This Blue Light Away From the Fireside, Things Can Get Twisted And Haunted And Crowded.  You Can't Even Feel Right.  So You Dream Of Columbus"

or look to the ZH blog roll

Mon, 09/06/2010 - 02:33 | 565505 Number 156
Number 156's picture

Lets just get the shit storm over already.

I agree. Its like having a bad tooth, and the dentist is telling you that he wont be able to pull it until next week. You know its going to hurt, but hell, you just want it over with.


Mon, 09/06/2010 - 20:11 | 566399 doolittlegeorge
doolittlegeorge's picture

Ahhhhh.  Waiting for Columbus.  My favorite Little Feat album.

Sun, 09/05/2010 - 21:40 | 565304 firstdivision
firstdivision's picture

Eh, anyone see AUDJPY action open today?

Mon, 09/06/2010 - 00:22 | 565442 Hephasteus
Hephasteus's picture

You are using a laptop. Your laptop has a microphone on it. Your laptop is updated to service pack 3. Any homeland security personel who wishes to turn your laptop microphone into a snooping device can. My guess is it has a webcam on it too if they want video.

Just saying. This is the world we live in.

Mon, 09/06/2010 - 00:51 | 565461 firstdivision
firstdivision's picture

No mic, nor webcam.  It does have speakers though.  If it had a webcam, I would masturbate in front of it often. 

Mon, 09/06/2010 - 13:35 | 565967 fajensen
fajensen's picture

Mine has a webcam ... Oh.

Sun, 09/05/2010 - 21:50 | 565311 john_connor
john_connor's picture

The strain on the ponzi increases every month in spite of the pandering of propoganda statistics and ratios.  Tic Toc, Tic Toc. 

Mon, 09/06/2010 - 11:43 | 565780 DosZap
DosZap's picture


Yep,it's like a REAL bad storm, suns out, but it turns to hades in a hurry.

You can feel it.




Mon, 09/06/2010 - 04:30 | 565540 Sudden Debt
Sudden Debt's picture



Mon, 09/06/2010 - 05:06 | 565554 M.B. Drapier
M.B. Drapier's picture

So, you're saying that France is going to burn up on social reentry?

... try the veal!

Mon, 09/06/2010 - 09:16 | 565623 Tense INDIAN
Tense INDIAN's picture

...i dont understand ...why does this author think that slump in dollar below 81 ...will be the turning pint...:

Mon, 09/06/2010 - 09:32 | 565633 Quintus
Quintus's picture

No idea.  I see nothing particularly significant about the 81 level specifically.

Mon, 09/06/2010 - 10:18 | 565666 old_turk
old_turk's picture

Because the periphery (the smaller EU countries) is/are beholden to the Big German and French banks to buy their debt.

If the German/French cartel do not get their juice ... then the periphery fails.

It's really as simple as that or you can go through all the gymnastics of multi-variable analysis w/Russia and the Chinese with a GE Capital kicker but the reality that you don't have a standalone banking system to play your own brand of ponzi eventually leads to these types of standoffs.

Where's that reset button?

Mon, 09/06/2010 - 10:37 | 565690 Mitchman
Mitchman's picture

If the German/French cartel do not get their juice ... then the periphery fails.

If the German/French banks don't get their juice don't they fail too?

Mon, 09/06/2010 - 20:15 | 566405 doolittlegeorge
doolittlegeorge's picture

indeed.  "if we don't hang together most assuredly we will hang separately."  Ben Franklin.

Mon, 09/06/2010 - 23:29 | 566537 pointingtrade
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