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Surging Libor-OIS And Cross Currency Basis Swaps Indicate Europe's Response Is Too Little Too Late

Tyler Durden's picture


Even as the immediate factor for the 1000 point drop in the Dow is investigated for the next several months by the SEC, a process which will likely not come to any reasonable market structure regulatory recommendation before the SEC is forced to analyze the next subsequent (and even greater) crash, the one primary fundamental cause for the sell off in stocks this week was the ever deteriorating situation in Europe. As the euro tumbled on Thursday afternoon, which we noted 20 minutes before the stock market crash began in earnest, as implied correlation algos went berserk, and as viewers were witnessing the near-warfare in Athens live, things just got too real for speculators (investors is so 20th century). Various computerized trading platforms merely kicked on (or rather, off) after the initial panic had already set in, and liquidity evaporated, leading to the implosion in the market. And the primary reason for the initial market pessimism early on Thursday was the fact that even as the whole world was listening to Jean-Claude Trichet to say soothing words after the ECB's rate decision, the central bank president once again did not realize the gravity of the situation. And to speculators, long habituated to Bernanke's endorsement of infinite moral hazard and speculative mania, the fact that someone refused to play "ball" and leave open the possibility that failure is still permitted in our day and age was the last straw. Now, 48 hours later, we learn that the rumors, which we reported about the ECB preparing a bailout fund, were indeed true. Our sense is that at this point the ECB's action is "too little, too late" as contagion fear has already crept deep within the fabric of various overt and shadow funding/liquidity mechanisms. Additionally, the world is now convinced that Europe can only deal with problems retroactively, and who knows how big and unfixable the next problem will be: the ECB, which has lost most of its credibility after "inviting" the IMF to do a heavy part of the bailout, is about to become the laughing stock of global central banks. Trichet is seen merely as a powerless bureaucrat, caught between Merkel's electoral struggles and Bernanke's demands for contagion interception and implicit Fed supremacy over Europe. The contagion from the "isolated" Greek fiasco is rapidly spreading. Here are some of the ways in which markets are about to be affected.

First, we present Evidence A of how the market reacted on Thursday to the critical (lack of) announcement by Jean-Claude Trichet. The chronological sequence of events culminates with Accenture trading at $0.01 and begins with rolling disappointment that Trichet had not received the "Global Moral Hazard" memo:

To be sure, those conspiratorially minded could say that a primary reason for the Thursday sell-off was to prove to Europe, whose various parliaments were voting on Friday on the Greek bail out package, that the end of the world would surely come if they did not do as the French and German banks demanded... Because as we have repeatedly demonstrated those standing to lose the most from a Greek collapse are merely Europe's incarnation of Wall Street. And as the ECB and the IMF had wasted all of their credibility and "doomsday talk" ammo, a practical demonstration would have served the best purpose.

The biggest worry that the ECB has let matters go too far, is that what was considered purely an exercise in sovereign risk, has now spread to financials as well. And will likely not stop there. This makes sense, as the banks are at the nexus between the public (bail out) vertical and the private (shareholder) space. As an aside, if Obama continues on his warpath with Wall Street, banks will very soon become regulated utilities: equity upside will be capped based on what side of the bed the president wakes up on. Until then, increased risk within the financial space will merely bring up PTSD flashbacks to the last quarter of 2008. As BofA shows in the chart below, sovereign risk has become a proxy for financial risk (and vice versa). In this sense what is happening with Greece (and the next much bigger country to be bailed out), is identical to the Bear-> Lehman catastrophic progression, as Zero Hedge has indicated repeatedly.

So now that financials (away from America) and European sovereign risk are congruent, this brings up the question of who is supposed to resolve the escalating crisis in Europe. And unfortunately, the two parties in control are the ECB and the IMF, the two most bureaucratic and ineffectual organizations in our day. It is no surprise that pundits hope that the Fed steps in and takes charge of the European bail out. Yet even the Fed's arms may be tied - unlike in the US, debt monetization will be difficult to pass in a traditionally hawkish ECB, not to mention the political complexity of dealing with one currency union but 20 different bond markets. Whose debt will the ECB monetize? Who will benefit the most? These are all questions that the Fed did not have to worry about. Which means that the Fed could be limited to providing merely FX swap bailout lines (more on this in a second).

And that Europe will need vast amount of liquidity imminently is beyond a shadow of a doubt. With Spain forced to pay a recent record 3.5%+ on its auction Thursday, a surge of almost 100 bps in a little over a month, it is only a matter of time before Spain follows Greece and Portugal into the penalty box of public capital markets exclusion. To demonstrate just how massive the check will be if the Greek contagion remains solely within the PIIGS, below we once again present the redemption calendar for 2010 and 2011 in Bills and Bonds for the peripheral countries. In a nutshell, there is over E700 billion in contractual bond redemptions in just the next two years. And this excludes any short-term funding needs by the banks of the PIIGS.

The critical observation here is that merely meeting Europe's funding needs, now that the ECB is increasingly relegated to second-tier status, the IMF's recently expanded to $500 billion New Arrangements to Borrow facility will be insufficient by nearly half to meet liquidity demands for the next 18 months. Let alone any discussion that by the time it becomes clear how unsalvageable the euro and Europe are, the US will be underrated by $100 billion as the one single biggest contributor to the NAB.

Yet all this would be irrelevant if, as some permabulls claim, America could simply decouple itself out of the Europe-shaken world and continue pretending that a +34k clear NFP print is really +290k, thus claiming all is well. However, as the very much globalized credit markets have demonstrated over the past week, decoupling is and has always remained a myth. And for those keeping a close finger on the pulse of the credit markets, one needs look no further than Libor, as well as the slightly more arcane cross-currency basis swap.

As can be seen below, the TED spread (spread between LIBOR and the 3 month UST), has been aggressively moving wider as LIBOR surges.

If you notice a similarity between the last week's LIBOR widening and the panicked blow up in the interbank lending rate in August 2007, September 2008 and March 2009, you are not alone. As Bank of America points out:

Libor [has begun] to set higher, widening out the spread between Libor and the central bank rate policy (OIS). This has a similar feel to August 2007 when the first signs of banking credit risk surfaced due to underperformance in subprime. The issue this time is not necessarily about the quality of the underlying assets, but rather the counterparty – a European peripheral country. The concerns are ultimately due to European banks holding the largest amount of peripheral sovereign debt. The effect on Libor and other metrics has therefore been a function of the exposure of different country banks to the debt of the peripherals. In contrast, Japan, Australia and Canada have very little exposure to this sovereign debt, and thus have had the lowest movement in Libor-OIS.

Yet the biggest concern aside from the actual asset value of underlying sovereigns, is the amount of dollar-notional held by European banks, and the currency funding mismatch, manifesting itself in an even more aggressive move in the EURUSD cross currency basis than in LIBOR (for now at least).

What this means in plain English is as follows, again from BofA:

One might be tempted to conclude that the situation in Europe should not matter much for the US. We do not believe this is the case since the financial markets would create the “contagion”, and Libor can be the conduit. USD Libor spiked over the past few weeks due to higher Libor submissions by non-US banks in the USD Libor setting panel. The higher USD Libor submission is ultimately a function of demand for dollars in Europe, which arises from large holdings of dollar assets by European banks. According to the BIS, as of December 2009, European banks held $3.59 7tn of US debt (this US debt is both private and public dollar-denominated debt). Note that total dollar-denominated debt held by foreign banks is $5.393tn, implying that European banks hold two-thirds of the US debt held by banks worldwide. This demand for USD financing overseas is also reflected in the significantly negative cross currency basis swap (see above), with the one-year EUR/USD swap at -50bp (versus -37bp at the end of March).

Further, the forward Libor-OIS have widened more than spot. We believe the market is essentially pricing in that the sovereign credit risk is not going away soon. This is also consistent with other measures such as the Libor 3s-1s basis, which also prices in continued stress. Until there is some significant plan put in place that can be scaled up to support any country, contagion risk should put upward pressure on Libor. As Chart 10 shows, even though longer maturity Libor-FF have increased, it is still moderate compared with 2007-08. Thus, we believe there is more room to go in the Libor-FF widening.

And herein lies the rub: it is always these excessive dollar asset holdings by European banks that force the Fed to come out and bail European institutions which get clobbered with margin calls once the euro plummets. Recall that at the peak of the post-Lehman crisis, in December 2008, the Fed disbursed over $580 billion in liquidity swaps to prevent just the kind of liquidity crunch that LIBOR is indicating could be in store for Europe all over again. And rumors are rife that the Fed is about to launch just these swaps again, if it hasn't already. Surely, Bernanke can not take the risk that left to its own devices, Trichet will only make an even bigger mess out of things. And due to the interconnectedness of credit markets, a liquidity crisis in Europe would promptly take the S&P back to 666, killing the Chairman's incipient debt inflation experiment in its tracks. Which is why we expect that the Fed will likely announce the reintroduction of currency swaps imminently, as the Fed is all too aware of how critical it is to be prepared in advance for another liquidity "risk flaring" episode.

Curiously, Bank Of America disagrees that the Fed will go ahead with currency swaps for the following very valid reasons:

  • Even though Libor-OIS has widened out significantly recently, current levels are still fairly moderate compared with 2007.
  • The Fed has been discussing ways to drain excess reserves from the banking system via term reverses/deposits etc. Currency swaps would increase the size of the reserves. Note that the Fed can drain reserves via increasing the SFP program, increasing the scale of reverse repos  and term deposits. But the Fed will need to be very careful about communication to prevent being viewed as a precursor to tightening.
  • A political issue is around the “exigent circumstances” clause in the Fed’s charter that has to be invoked in order to allow currency swaps with nonbanks. In the Finance Reform Bill currently being debated in Congress, there is some discussion about removing the exigent language from the Fed’s charter. We imagine the Fed would not want to bring unnecessary attention to the exigent clause just yet.

Good points, although we have no problem seeing Bernanke override the market any time on threats of Mutual Assured Destruction for bullets 1 and 2, and seeing the facility with which he has invoked 3 in the past it probably would not be an issue either, although we would love to see Alan Grayson's response, who will likely crucify the Chairman if that is the pretext used to bail out Europe... again.

The bottom line is that Europe is caught in a corner, in which every subsequent action is now seen as a reactive response to the most recent calamitous incident, and thus not even last night's announcement of a bail out facility will do much for the EURUSD rate. And should the EUR crash to the 1.20 support level, then the Fed will have no option but to institute currency swap lines, which in turn will activate a whole new set of liquidity parameters. Not the least of which will be that the realization that the recovery leg of the fabled V-shaped economic expansion has been a mirage. The only other option for Europe, is outright monetization. We think this will not happen, as that action would be the death knell of the Euro, which would then tumble close to parity, once again forcing the Fed to get involved. If anyone will monetize anything, it will be the Fed, which is so far saving the worst for last. It is likely that the mid-term elections are seen by Bernanke as the Maginot line past which it will still have sufficient time to deflate enough of the dollar to catch the massive CRE refi wave in advance of the 2012 cliff. Yet the clock is ticking - each day that the DXY rises, is another day that makes the trillions in worthless maturities increasingly more difficult to roll, and thus will force all the mark to myth on bank balance sheets to come out in the open on the maturity date. While the clock has now run out for Greece, and most of the euro periphery, its ticking has just gotten that much louder for the United States itself. But not before Europe is forced to make the difficult choice of submitting to Fed authority or face the future on its own, and without its own consolidated currency.


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Sat, 05/08/2010 - 10:13 | 337876 Sqworl
Sqworl's picture

He who hesitates is Slovaki lunch...

Tyler: Thank you for keeping it real...:-)

Sat, 05/08/2010 - 10:14 | 337877 tj3
tj3's picture

The clock is ticking on the FED too. No matter how worthless the thought of the one time audit is...people in the money are starting to shat the pants.

and also


+1 Tyler

Sat, 05/08/2010 - 10:25 | 337881 Joe Sixpack
Sat, 05/08/2010 - 20:27 | 338499 Inspector Asset
Inspector Asset's picture

Ah yes, like a line of dominos they will fall. 

And I thought it was just sub prime, 


Blue print for the new world currency.  Maybe a fast track to the chip.


T.D. thanks for bringing up the notion "why are you still trading?"

Forget the idea you will always get burned. 

Why contribute to the problem and the illusion.



Sat, 05/08/2010 - 10:35 | 337884 hedgeless_horseman
hedgeless_horseman's picture


"Prevent a sovereign debt crisis...[with] borrowed by the European Union’s central authorities with guarantees by national governments."

These guys are brilliant!  Prevent a sovereign debt crisis by the sovereigns borrowing more money.  Makes perfect sense to me. 


By James G. Neuger and Gregory Viscusi

Germany, the biggest contributor with as much as 22.4 billion euros over three years, fell in line yesterday with endorsements in the lower and upper houses of parliament. A group of German academics filed a lawsuit to try to halt the payout. A court today rejected the challenge.

The political leadership of the $12 trillion economy also signed off on a 110 billion-euro ($140 billion) aid package for Greece negotiated by finance ministers last week. So far nine governments have cleared the way for funds to be sent to Athens.

May 8 (Bloomberg) -- European leaders agreed to set up an emergency fund to halt the spread of Greece’s fiscal woes, seeking to prevent a sovereign debt crisis from shattering confidence in the 11-year-old euro.

Jolted into action by the sliding currency and soaring bond yields in Portugal and Spain, leaders of the 16 euro countries said the workings of the financial backstop will be hammered out before Asian markets open late tomorrow European time.

“We will defend the euro, whatever it takes,” European Commission President Jose Barroso told reporters early today after the leaders met in Brussels.

Europe’s failure to contain Greece’s fiscal crisis triggered a 4.3 percent drop in the euro this week, the biggest weekly decline since October 2008. And it prompted the U.S. and Asia to rally around in a bid to prevent a global sovereign-debt crisis from pitching the world back into a recession.

“Europe is getting its act together,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Time will tell if this statement is enough to satisfy the European bond market vigilantes.”

European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the European Union’s central authorities with guarantees by national governments. Finance ministers will meet at 3 p.m. tomorrow in Brussels to flesh out the details. A press briefing is scheduled for 6 p.m.

‘That’s Significant’

“When the markets re-open Monday, we will have in place a mechanism to defend the euro,” French President Nicolas Sarkozy said. “If you don’t think that’s significant, you haven’t been to many EU summits.”

Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichetaccelerated the market selloff on May 6 by rejecting that measure.

With the euro facing its stiffest test since its debut in 1999, the summit -- called to discuss efforts to coordinate economic policies -- turned into a crisis-management session that dragged past midnight.

The euro slid to $1.2715 from $1.3293 during the week, and is down 15 percent since late November. European stockssank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent to 237.18.

Surging Spreads

The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of benchmark German bonds rose to euro-era highs yesterday. The premium on 10-year government bonds jumped as high as 973 basis points for Greece, 354 basis points for Portugal and 173 basis points for Spain.

Europe came under pressure on a hastily arranged conference call of Group of Seven finance chiefs yesterday. All agreed on “the need for a clear, timely and strong response,” Canadian Finance Minister Jim Flaherty, who chaired the call, told reporters in Ottawa. “We hope to see a strong, early policy response in Europe.”

The spreading contagion also drew the attention of President Barack Obama, who said in Washington that U.S. regulators will examine the “unusual market activity” that on May 6 briefly drove the Dow Jones Industrial Average down by almost 1,000 points, erasing more than $1 trillion in wealth before the market bounced back.

“There are impacts on financial markets, including share markets, from the events in Europe and in Greece more specifically,” said Australian Treasurer Wayne Swan, speaking to reporters in Canberra today. “We are urging as speedy a resolution as is possible in the circumstances.”

Merkel’s Call

In Brussels, German Chancellor Angela Merkel stepped up German calls for a closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules, originally drafted by Germany in the 1990s.

Europe will send “a very clear signal against those who want to speculate against the euro,” Merkel said.

With the euro region’s overall deficit forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011, the vow to bring budget shortfalls back below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets.

Plans for a European credit-rating authority are already under consideration at the EU Commission, the bloc’s Brussels- based executive agency. It also is investigating whether ratings companies such as Standard & Poor’s wield too much power over investors’ perceptions of governments.

Restrictions Considered

Asked whether steps to stem speculation against government bonds would include restrictions on short sales or credit default swaps, Barroso said “some of the points you have mentioned will be contemplated.”

Sat, 05/08/2010 - 10:35 | 337890 williambanzai7
williambanzai7's picture

Very clear signals indeed...

Sat, 05/08/2010 - 10:45 | 337892 hedgeless_horseman
hedgeless_horseman's picture

“If you don’t think that’s significant, you haven’t been to many EU summits,” said French President Nicolas Sarkozy.

True.  I don't, and I have not.

If France is going to see, "surging spreads," I wish Ségolène Royal would have been elected, versus Sarkozy, if you know what I mean.

Sat, 05/08/2010 - 11:37 | 337940 ambrosiac
ambrosiac's picture


...seeing that Greece did elect a socialist, and has been doing SOOO well?!...

Sat, 05/08/2010 - 11:56 | 337947 hedgeless_horseman
hedgeless_horseman's picture

Surging spreads...surging spreads...get your mind in the gutter.

Sat, 05/08/2010 - 20:34 | 338507 Inspector Asset
Inspector Asset's picture

Gee, I wonder of Goldman did a bulk of their business in Greece?  Maybe with a guy named John Paulson? Na, must be another Paulson.



Sat, 05/08/2010 - 11:23 | 337913 M.B. Drapier
M.B. Drapier's picture

Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

Would it really hurt for some financial journalist somewhere ever to mention in passing to his readers that, oh, by the way, for the ECB to directly buy government bonds is completely bloody illegal?

With emphasis on 'directly', of course. So the "overblown pawnshop" will soon slosh cheap money on the commercial banks at the same time as it pledges to take all Greek sovereign debt forever at shallow, shallow haircuts: nudge, nudge, wink, wink.

Sat, 05/08/2010 - 11:41 | 337943 Amsterdammer
Amsterdammer's picture

The ECB has already 'broken' its book

by accepting the 'near-to-junk' or 'junk'-rated

Greek bonds. As the spanish El Pais reports

(and they've been having pretty good information

of late, 600 billion euros are in discusssion

right, either through a stabilization fund or

the E.C.B buying soverreign bonds, and possibly

helping the banks. Imho, you are totally right, but

now that both treaties have been broken

de facto, maybe is it time to rewrite the book.

When you watch the speed at which the Greek

bail-out was voted, you can expect a few

amendments to see the light of the  day by tomorrow



Sat, 05/08/2010 - 14:12 | 337956 M.B. Drapier
Sat, 05/08/2010 - 10:27 | 337885 cossack55
cossack55's picture

Is the ticking clock Big Ben or Big Ben B.?

Sat, 05/08/2010 - 10:42 | 337889 plocequ1
plocequ1's picture

Come on Tyler, Lets be fair now. You gotta like the way it sounds.. " IMF bails out Greece" Thats good for a 50 point gain on the Dow. Who gives a fuck if its too late. We must protect the all sacred, Untouchable, Godly, Higher than thou , My shit dont stink Wall street and the Stock market. Of course im being ultra sarcastic. I cant wait for this bubble to pop and watch all the filth, corruption, Dirt and Feces to come spewing out. I sure hope your charts and theories are correct.

Sat, 05/08/2010 - 13:39 | 338080 Al Huxley
Al Huxley's picture

The magic bull spell that resulted in a 50 point rally every time any piece of ridiculous propaganda was spouted by the MSM is now broken.  It truly is too late.  If TPTB truly manage the market, they should have allowed a decent correction in March or early April to maintain some stability and support points in the market.  Now its completely screwed.

And while I share your opinions about the corruption, when things really go down I expect it will cause so much suffering and misery that it will be way too nasty to enjoy.

Sat, 05/08/2010 - 15:54 | 338256 geminiRX
geminiRX's picture

Reminds me of the movie "The Matrix".  Unplugging the masses from their manufactured reality will indeed be a spectacle. I look forward to the day. I can't stand the deception.

Sat, 05/08/2010 - 10:47 | 337899 chinaguy
chinaguy's picture

It's on!

Sat, 05/08/2010 - 10:51 | 337901 anonymike
anonymike's picture

Also, check out Credit Derivatives Research Counterparty Risk Index which has turned north in recent days (Mar '09 peak was 305)

Sat, 05/08/2010 - 10:57 | 337906 jal
jal's picture


“Whose debt will the ECB monetize? Who will benefit the most?


... not even last night's announcement of a bail out facility will do much for the EURUSD rate. And should the EUR crash to the 1.20 support level, then the Fed will have no option but to institute currency swap lines, which in turn will activate a whole new set of liquidity parameters. Not the least of which will be that the realization that the recovery leg of the fabled V-shaped economic expansion has been a mirage. The only other option for Europe, is outright monetization. We think this will not happen, as that action would be the death knell of the Euro, which would then tumble close to parity, once again forcing the Fed to get involved. If anyone will monetize anything, it will be the Fed, which is so far saving the worst for last.... “


I’ve read opinions that expressed that Germany wanted a lower EUR and that as a result Germany would be the beneficiary. 



Sat, 05/08/2010 - 11:17 | 337919 Mercury
Mercury's picture

At least most of these countries don't have much of a military standing around. Plenty of major European wars have been triggered over smaller potatoes.

I'd still be nervous about Turkey if I lived in Greece.  There's some bad blood there and the Turks have the largest standing army in Europe by far.

Sat, 05/08/2010 - 14:09 | 338131 cbaba
cbaba's picture

Don't even think about it. Turks will never go into war with Greece or any other country. Its and old Greek myth for centuries. Its true that  Ottoman Turks invaded Greece and controlled the land few hundred years , but not only Greece, they controlled all middle east and north Africa too, but that was something in the past, in old times everybody invaded another country to get tax and money but in the 21st century those invasion times is over. There is a new Republic in Turkey which has a  motto " peace in the country, peace in the world" and nobody likes a war with any country unless there is a threat coming to defend the country.Besides Turks likes Greeks , they want to  have more close relations and forget the past.

Sat, 05/08/2010 - 16:05 | 338264 Charlie J
Charlie J's picture

There is indeed bad blood between the Turks and the Greeks.  In the mid-60s I lived in Istanbul and my step-mom was Greek ethnic.  When I went to Athens and said (in Greek) that I lived in "Istanbul", the folks bristled and pointedly told me it was "Constantinopolis".  I was absolutely amazed that they still called it that. 

I could tell many more stories, but, my real comment is that Turkey is not going to invade Greece and try to take it over.  They might still fight over Cypress, but Turkey is not going to try and annex Greece.  Sheesh.

Sat, 05/08/2010 - 11:40 | 337921 youngandhealthy
youngandhealthy's picture

I am puzzled over ZH. For almost 2 years ZH has been hammering Ben B, Geithner, Paulson for their bail-out of US investment Banks and rightfully so. Now when ECB keeps to it rules and act as being independent from politicians, the Euro Parlament, and the EC and "refuse" to bail-out banks by buying their sovereign bonds (from Greece) then ZH "turn" against ECB and JCT? I don't get it.

Sat, 05/08/2010 - 12:30 | 337990 Cheeky Bastard
Cheeky Bastard's picture

Its hard to admit that the USA has become more socialist, fascist, whatever-ist than Europe. Its like a giant kick in the balls to America. Also, Tyler seems to suffer from multiple personality disorder *tsk tsk*

Sat, 05/08/2010 - 12:33 | 337992 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture


Sat, 05/08/2010 - 12:54 | 338016 Prof Gulliver
Prof Gulliver's picture

It's true. Tyler has been predicting a market pullback for a long time based on the lies and manipulation that floated the indexes to unwarranted highs. Then when we get a crashlet, he says that was manipulated by Bennie Mae so he could sell his bonds. I think Tyler is just a cranky contrarian, even if it means he has to contradict himself.

Sat, 05/08/2010 - 12:59 | 338022 Cheeky Bastard
Cheeky Bastard's picture

No, Tyler is cool man, but he needs to coordinate sentiments between his various selfs

Sat, 05/08/2010 - 13:09 | 338030 Prof Gulliver
Prof Gulliver's picture

Ha! Mebbe he's not Tyler Durden/Narrator. Mebbe he's Eve White/Eve Black.

Sat, 05/08/2010 - 13:19 | 338045 Psquared
Psquared's picture

Wait a minute. He has been talking about a crash based on the lack of fundamentals not a manipulated one caused by computers - although he has been warning about that too. We don't know if this was a crash or just a temporary setback. Personally, I think we have an attempt at a rally next week based on 1) an SEC coverup; 2) ECB bailout; and 3) pump monkeys on CNBC telling everyone to buy, buy, buy.

If a rally does not happen next week we drop further, and if the news gets worse out of Europe this "could" be the beginning of the end.

I also think there is some chance that Thursday was an orchestrated warning to the EU/ECB to bailout Greece and not leave banks holding the bag, and to the Senate not to fuck with Mother Market/Wall Street. It was the equivalent of, "there will be riots and "Marshal Law" only they have hollered for that wolf a little too often. This was a different kind of threat and it may have worked.

Sat, 05/08/2010 - 18:32 | 338379 Tyler Durden
Tyler Durden's picture

When the ECB formally announces it will be doing no monetization, covered bond buying, etc. and is actually tested to that statement (which should happen in the next 168 hours) we will applaud them. In the meantime, Trichet's discourse has been meandering from one hypocritical end to another. At least Bernanke is steadfast in his slash and burn tactics.

Sat, 05/08/2010 - 19:35 | 338460 M.B. Drapier
M.B. Drapier's picture

At least Bernanke is steadfast in his slash and burn tactics.

Careful what you wish for. I wouldn't interpret JCT's Mr. Probity act, or his lack of silky Maestro skills at timing and theatre, as a lack of fundamental will to do Whatever It Takes to postpone the evil day. My best guess is that - excuse my business French - when cornered Trichet will print like a motherfucker. (He'll have to do it to save his own bank, never mind anyone else's.) And that the German politicians won't stop him, not this side of something snapping.

Sat, 05/08/2010 - 11:23 | 337926 Biff Malibu
Biff Malibu's picture

I have a friend with >20 years as an officer in the military.  We had a few beers and began to talk.  He told me some interesting things I thought I would share with all of you, as the ZH community is THE ONLY place to find interesting information...

1) there is talk that a North Korean submarine torpedoed the oil well in the Gulf.  Maybe the same one that sunk the South Korean ship.  A huge environmental disaster would show Barrack that they can F- with us at will.

2) the 9/11 airliner that crashed in Pennsylvania that was "overtaken" by the passengers was actually shot down by an F-16.  Probably the one that Cheney ordered shot down.  He said most national guard pilots are airline pilots for their regular jobs and that he had heard talk.

3) also there is confirmation that there is a woman out there that had breast implants with explosives.  they know it happened, they know she exists, but they don't know who she is or where she is.

Anyway, obviously this is second-hand and third-hand info, but to me it makes sense, especially the torpedoed oil rig.

Have a good weekend everybody.  Tyler, thank you for once I'm on the right side of the market.  It's fun watching the R-TARDS on CNBC try to spin something as fact, now that we ZH'ers are armed with the truth.



Sat, 05/08/2010 - 12:15 | 337971 MaxPower
MaxPower's picture

As a long-time military officer, I'm sad to report that you're not passing along second and third-hand info; you're passing along second and third-hand rumors.

It's important to highlight that everyone in the military, officer or enlisted, is a puppet lynchpin in the flag-waving cornerstone of the propaganda machine that is the congressional-military-industrial complex. All of what you've mentioned are broad strokes of the "paint an enemy" brush, resulting from too many bored pilots sitting around a briefing room, collecting what's known as "welfare with dignity."

In 2002, during a deployment, I personally (just for fun) started a rumor that our unit would be trading one aircraft type for another just to see what would happen. That rumor met me at a base ten hours away in another country by the time I landed there on the same day that I started the rumor.

Also important to remember that National Guard units tend to draw local recruits. Where I served, many members still flew Confederate flags on their cars, which should indicate their willingness to create an alternate reality through the rumor mill.

Could all of what you've listed be true? Possibly, but you've provided nothing to indicate that. We have too many factual, important issues to deal with right frickin' now to be distracted by this.

Sat, 05/08/2010 - 14:31 | 338155 Simon Jester
Simon Jester's picture

Completely off the general topic, but, as far as flight 93 is concerned, I KNOW what I saw with my own 20/15 vision while looking through my Swarovski 7x42's on that clear eastern Ohio morning. The "official" story is bunk.

Sat, 05/08/2010 - 14:52 | 338186 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

Please see my comment to Biff below, and share your story.

Sat, 05/08/2010 - 21:36 | 338571 Bringin It
Bringin It's picture

Agreed - official flight 93 story is pure bunk/junk.

There was lot's of debris miles away.  Impossible if the plane did not break up in the air.

I watched local news coverage, live on 9/11 morning from PA. showing locals at a boat dock on a lake holding airline seat cushions and similar debris.

I pray for the sheeples to overcome their ignorance.

Sat, 05/08/2010 - 12:27 | 337978 Pure Evil
Pure Evil's picture

Not to shoot down your NK theory, but even the military has its own rumor mill, called scuttlebut.

And, who's to say some other person in the military didn't read the same story and start passing it around as a joke only to end up being taken seriously by others.

The official propaganda from the MSM is that the drilling rig hit a Methane Hydrate pocket that travelled up the drill pipe blowing out the seals. This is coming straight from the rescued platform workers.

I always thought that NK story was a disinformation campaign put out to titillate the masses.

But, who's to say it ain't a little coincidental that a SK naval ship was torpedoed a few weeks before the drilling plateform could have been torpedoed. The torpedoing of the SK naval ship was just NK's way of showing the US what it could accomplish.

But, the GOM is full of Methane Hydrate pockets as well as the Caribbean so I suspect the accident was caused by Methane Hydrate.

Although, if they wanted to they could send down submersibles to view the drilling platform and attempt to find the cause of the explosion.

At the same time, who can believe anything put out by official sources now days.

Sat, 05/08/2010 - 12:56 | 338017 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

Blow-outs are caused by a gas bubble that rises up through the well. Because of the depth (in this case a 18000 feet well as far as I remember) a teeny weeny bubble will expand and excalate the blow-out rapidly on its way up through the well as pressure decreases. In a normal oil reservoir you also have gas. This is not unique to the GOM. Drilling is dangerous work.

Sat, 05/08/2010 - 13:16 | 338043 Ned Zeppelin
Ned Zeppelin's picture essence you're telling me the Gulf oil rig blowout was caused by a giant Earth fart?

Sat, 05/08/2010 - 13:52 | 338100 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

HA HA...ahemn.....well... yes I would say that is just about accurate. As in all things concerning Mother Earth - she is truly great - also when it comes to matters of flatulence.

Sat, 05/08/2010 - 14:31 | 338156 cougar_w
cougar_w's picture


"Quick! Light me!"

Nature has a dorky sense of humor.

Sun, 05/09/2010 - 00:13 | 338700 abc123
abc123's picture

Wow.  Scuttlebut really moves fast. 


Do a little research that involves non-blog material....


Check under BOP for blow out preventer.  Also read up on underbalanced drilling...



Sat, 05/08/2010 - 12:41 | 338002 seventree
seventree's picture

Wouldn't an NK deisel sub have to make most of that trip at the surface? Possibly accompanied by a fuel tender? How closely does US surveillance monitor NK sea traffic? Just wondering.

Sat, 05/08/2010 - 13:20 | 338053 Kayman
Kayman's picture

Come, come now....

I heard that North Korea dis-assembled an entire sub, smuggled the pieces via suitcases to New Orleans, re-assembled the sub, and rammed it into the platform. 

Jeez, people, if China wanted its puppet to cause damage, it would not be an oil platform in the Gulf of Mexico.

When I want to understand what's going on with things like an oil platform igniting, creating a monstrous oil leak, I first think Keystone Cops...

Then, and only then, will you start finding the truth.

Sat, 05/08/2010 - 13:25 | 338056 Psquared
Psquared's picture

hehehe ... yep, that would be correct

It would have to slip through the shipping lanes all the way across the Pacific, then up from Cape Horn, make a stop at a friendly port or two along the way (say Venezuela/Cuba) and get into the Gulf without being spotted.

Ain't gonna happen.

Sat, 05/08/2010 - 12:53 | 338014 THE DORK OF CORK
THE DORK OF CORK's picture

You mean I cannot even fondle womens breasts anymore, this police state is becoming intolerable.

Sat, 05/08/2010 - 14:36 | 338164 MaxFrost
MaxFrost's picture

Nothing wrong with dying while doing something you love...

Sat, 05/08/2010 - 14:53 | 338190 THE DORK OF CORK
THE DORK OF CORK's picture

The ultimate sacrifice for your country. 

Sat, 05/08/2010 - 13:02 | 338023 Biff Malibu
Biff Malibu's picture

I should have put 'for entertainment purposes only' at the top.  I apologize--it is nothing more than rumor.  I thought it was interesting so I posted.

Sat, 05/08/2010 - 14:29 | 338154 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

No worries Biff. It is just a little Saturday fun, and you did get some serious answers. They just did not believe the rumours.

1) The GOM torpedo rumour is said to have been started by an internet hoaxter with an impossible name.... Shah something... I don't remember.

2) You can check out the 9/11 Truth/Investigation sites. There are compelling accounts from witnesses, that suggests that there was no airline crash at all. The accounts suggest that the thing that crashed was smaller and was not full of jet fuel.

Sun, 05/09/2010 - 03:25 | 338826 MaxPower
MaxPower's picture

No apologies needed. I just think it's best to keep our focus elsewhere at present.

Also, I know from experience how time-consuming those military rumor mills can be; best to just stay away.



Sat, 05/08/2010 - 14:27 | 338153 cbaba
cbaba's picture

Ask yourself, Does a High tech North Korean submarine exists which can come to the US shores without even noticed by US navy, hit a target and return back his home ? Are you kidding ?

Sat, 05/08/2010 - 16:42 | 338289 Biff Malibu
Biff Malibu's picture

<tin foil hat on>

by the way, the story is it was a North Korean cargo ship leaving Cuba that wandered within 200 miles of the Deep Horizon, launched a north korean mini-sub that IS known to exist and the sub detonated itself under the platform after torpedoeing the well.  The cargo ship then continued on to venezuela.  I believe these rigs are in international waters correct?  even if there were hostile subs in the GOM would we do anything about it other than track them?

<tin foil hat off>

Sat, 05/08/2010 - 11:23 | 337927 BlackBeard
BlackBeard's picture

Popular satellite radio/youtube news show naming names of corporatist senators.  Good to see other media outlets (albeit small) get the word out:

Sat, 05/08/2010 - 11:34 | 337938 Janice
Janice's picture

Still standin?  Just askin.

Sat, 05/08/2010 - 12:25 | 337984 BlackBeard
BlackBeard's picture

haha cheeky monkey.  Rumors of a coordinated Euro bailout had me a little wilted yesterday afternoon.

Sat, 05/08/2010 - 12:37 | 337997 Cheeky Bastard
Cheeky Bastard's picture

hey hey; fuck you 


Sat, 05/08/2010 - 16:11 | 338270 Janice
Janice's picture

Calm down CB, I got a litle somphen somphen going on.  I'm trying to find out if BlackBeard is a true black beard or whether it's Just for Men. Only one way to find out for sure.

Sun, 05/09/2010 - 02:07 | 338786 BlackBeard
BlackBeard's picture

Old Spice Sweetie.  Key word "Old"

Sun, 05/09/2010 - 13:56 | 339488 Janice
Janice's picture

Too much fun!  I imagine that like wine, you have aged gracefully, as have I.

Sat, 05/08/2010 - 11:59 | 337950 Fix It Again Timmy
Fix It Again Timmy's picture

The problem is that which Margaret Thatcher summed up so succinctly many years ago:” The problem with socialism is that eventually you run out of other’s people money”.

Sat, 05/08/2010 - 12:48 | 338010 Pure Evil
Pure Evil's picture

Socialist have two sources of funding. Wealth re-distribution via tax mechanisms, and the printing press.

When you've run out of other people's money to steal, you can always rob them blind a second time through monetization.

Sat, 05/08/2010 - 14:34 | 338159 cougar_w
cougar_w's picture

She wasn't thinking about Wall Street then, and gambling with other peoples' money, and then being bailed-out by taxpayers. And not a socialist in sight.

Sat, 05/08/2010 - 12:01 | 337954 sangell
sangell's picture

All that is needed is a European Rating Agency and a ban on short selling.

Sat, 05/08/2010 - 12:04 | 337958 4shzl
4shzl's picture

banks will very soon become regulated utilities

Sounds good to me. I see no value whatsoever in an "entrepreneurial" commercial banking system.  Commercial banks should be rate-regulated utilities -- boring and reliable.  Deposit taking and plain vanilla financing should be conducted according to well-defined standards monitored by steely-eyed, unimaginative regulators.  Entrepreneurial banking with its proprietary trading, financial engineering, and other forms of exotic risk-taking should become a pure, private sector activity -- unassisted by any form of government support.

Sat, 05/08/2010 - 12:51 | 338012 Pure Evil
Pure Evil's picture

But, then you limit the political nomenklatures ability to steal their citizens wealth through fractional reserve lending.

Sat, 05/08/2010 - 14:36 | 338162 cougar_w
cougar_w's picture

But only for a minute. They'll come up with something.

Smartest guys in the room right there, oh yeah.

Sat, 05/08/2010 - 12:42 | 337959 Psquared
Psquared's picture

I'm beginning to hope this is the beginning of the end. Not because I enjoy destruction, but because it means the quicker we can start rebuilding. Once the pyrotechnics are over, the money pipe is broken and we have a few elections where people are elected who actually care about more than "money" we might get somewhere. Otherwise, it will be Chinese water torture for years.

Along those lines, I don't think the public is going to stand for a Fed bailout of Europe - if that is what it comes to. We may well see some strikes and riots in the US if that happens and every incumbent up for election will have his/her job in jeopardy.

For me, the rejection of the Kaufman/Warner Amendment to audit the Fed and the failure to put some teeth into financial reform, along with the financial terrorism on Thursday, were the last nails in the coffin.

History may show that the GDII started May 6, 2010. (or NO later than)

Sat, 05/08/2010 - 14:42 | 338168 cougar_w
cougar_w's picture

I like to imagine that after the fall of Rome in 471 all over the region small communities and isolated towns began selecting their leaders for their skill not in speech-a-fying or pandering but in finding real solutions to actual problems impacting their close neighbors.

That would have been sweet.

Of course, we don't know because that was the Dark Ages. Dark because little was recorded and few records survived. But you know that's what happened.

Pity that all we celebrate today are pirates, marauders and tyrants. Where is the history of quiet, strong people of impeccable morality moving mountains to rebuild what the Visigoths (real and figurative) destroyed?

Sat, 05/08/2010 - 18:51 | 338414 ExistentialSkeptic
ExistentialSkeptic's picture

rebuild what the Visigoths (real and figurative) destroyed?

There you go impugning the Visigoths.  The Romans pretty much had it coming at that point, n'est-ce pas?

Sat, 05/08/2010 - 17:56 | 338342 Dburn
Dburn's picture



I agree with the sentiment. I still have 12 years until my SS checks never arrive, I'd like to get this shit over with now and at least seem some serious pitchfork action in the DC to Wall Street Fact free, Law free , profit off of everything zone. I hate to think about going two toes up without seeing "Jump You Fuckers" become a reality. 

Sat, 05/08/2010 - 12:06 | 337962 AN0NYM0US
AN0NYM0US's picture

why is Bloomberg TV featuring car racing



Sat, 05/08/2010 - 12:12 | 337968 markar
markar's picture

I'd still be nervous about Turkey if I lived in Greece.  There's some bad blood there and the Turks have the largest standing army in Europe by far.


One NATO country attacking another? THAT would be interesting!

Sat, 05/08/2010 - 12:21 | 337975 hedgeless_horseman
hedgeless_horseman's picture

I believe Hitler had a treaty with the Russians, too.

Sat, 05/08/2010 - 13:06 | 338027 kaiten
kaiten's picture

So you compare NATO to a treaty between Hitler and Stalin? ;p


Btw, the treaty was called "Molotov-Ribbentrop Pact".

Sat, 05/08/2010 - 13:37 | 338074 Kayman
Kayman's picture

The M-R pact was designed solely to carve up Poland. Neither Hitler, nor Stalin trusted each other. Period.  

The M-R Pact held the same veracity as Chamberlain's " I have Herr Hitler's signature here- peace in our time, blah, blah, blah.... 

NATO today serves only to pawn off European security costs on to the American taxpayer.

Sat, 05/08/2010 - 13:20 | 338049 Cheeky Bastard
Cheeky Bastard's picture

Yeah, but that was just because he was not ready to wage a two-front war since the re-armament wasn't yet finished. It was a purely defensive move on Hitlers part which is really fucking surprising given that Russian army was in shambles at the time when Molotov and von Ribbentrop signed the agreement and Hitler could have stormed Russia in the matter of weeks if he had chosen to fight on the Eastern Front first and Europe second. Also he would have had a support from all European countries given that many of those countries were scared beyond any rational thought of the philosophical and political and most importantly economic phantasmagoria which was Soviet style collective communism [Stalinism]. Hitler always said that the true Lebensraum of the German people is located in the East and that Europe holds purely cultural meaning for German people and is of no strategic significance to Germany's goals. Also Chamberlain supported Hitler on numerous occasions and would backed him unequivocally if Hitler decided to attack Russia. It was Goering who persuaded Hitler that European expansion is more important than the expansion to the east, and combine that with Hitler masochistic hatred towards everything and everyone which represented the Old World Order. Hitlers New World Order was conceived upon the understanding that all European and Eurasian nations and their peoples should be subdued to the will of Germany and its people. Hitler made a mistake seizing European countries [but to be fair, there was almost no coordinated effort to stop him] and going into Africa when Africa was of no importance [but held a strong meaning to Hitler since African colonies represented the true wealth of the Old World Order and Hitler strategically thought that if he conquers the colonies the shipment of war materials to European nations will halt and he will have no problems in conquering those nations as well]. Both Hitler and Stalin knew since app. 1936 that the war between Germany and Russia is inevitable, and on numerous occasion Hitler spoke against the monster of communism but he just could not have afford a two-front war, and Stalin had no coordinated and structured army to speak of and thus the Molotov-von Ribbentrop pact came as a natural pact which only goal was to give Russia more time to build a war industry and a big enough army and to give Germany a window in which it could seize Europe. 

Sat, 05/08/2010 - 13:35 | 338070 kaiten
kaiten's picture

Yes, I know that. WWII was really a war about russian land and german eastern expansion, all other fronts were only secondary distrations. Germany lost the eastern front and thus the whole war.

Sat, 05/08/2010 - 12:25 | 337982 M.B. Drapier
M.B. Drapier's picture

Now, 48 hours later, we learn that the rumors, which we reported about the ECB preparing a bailout fund, were indeed true.

Surely the bailout fund is a fiscal, political response while the ECB rumour was about monetary, central-bank action? Nonetheless, my guess is that the ECB rumour will indeed turn out to be true or roughly true as well.

Sat, 05/08/2010 - 12:30 | 337988 Gold...Bitches
Gold...Bitches's picture

Just saw this today.  Its about time.


Feds Probe JP Morgan’s Silver Trades


Federal regulators have launched both a criminal and civil investigation against JPMorgan Chase for its trading activity in precious metals market.
The Commodities Futures Trade Commission is looking into civil charges and the Department of Justice’s Antitrust Division are handling the criminal probe, according to sources who did not wish to be identified due to the sensitive nature of the information.

Sat, 05/08/2010 - 12:58 | 338020 Hulk
Hulk's picture

I don't think it matters anymore GB. My belief is, with the world being insolvent and that fact quite obvious now, we are going to see a rush to take delivery in the coming weeks and months, which will expose the paper PM market for the bullshit that it is,and price spike the PM's to their true value

Sat, 05/08/2010 - 13:19 | 338052 Mitchman
Mitchman's picture

The Hunt brothers must be jealous.

Sat, 05/08/2010 - 12:30 | 337989 reload
reload's picture

The Germans do want a lower Euro - but not a collapsing Euro. As a nation with a respectable personal savings rate they can not politically let the ECB off its leash and say `sure go ahead and monetise some mediteranian bonds`The German population would be outraged, and rightly so. The impasse and deliberations will drag out - uncertainty is going to gnaw at markets for some time. Here in the UK the MSM are just starting to get a little bit real and discuss our own disasterous financial situation, the need for swift and decisive action to cut our defecits and resolve our structural problems. Meanwhile the individual more responsible than any other for our predicament remains as Prime Minister - despite losing Thursdays General Election. 

Sat, 05/08/2010 - 12:45 | 338007 markar
markar's picture

I wonder how beneficial a weak Euro is to the Germans since most of their exports are to other EU countries.

Sat, 05/08/2010 - 12:43 | 338005 Caviar Emptor
Caviar Emptor's picture


Money can't buy you happiness.

That was the message from the Federal Reserve chairman on Saturday to graduates of the University of South Carolina.

"We all know that getting a better-paying job is one of the mainreasons to go to college. ... But if you are ever tempted to go into a field or take a job only because the pay is high and for no other reason, be careful!" Ben Bernanke said in his commencement address.

"Having a larger income is exciting at first, but as you get used to your new standard of living and as you associate with other people in your new income bracket, the thrill quickly wears off," he said.

Ben in an anti-capitalist, American-iconoclastic faux discourse tells the Hoi Polloi to lower their aspirationalism and "Just Say No"  to beamers (!). Meanwhile, back at the ranch, he's telling the Hoi Oligoi not to worry, the Fed won't be audited. Their secret's safe. 

Sign of the times.


Sat, 05/08/2010 - 13:31 | 338062 Cheeky Bastard
Cheeky Bastard's picture

He is right on this one. I know he must be hated more than any man [except Bush] in the past 20 years by the people of ZH, but he is right on this one. Most of my life i had more money than i could spend in 10 lifetimes and sure it gives you a feeling of security and all that, but never happiness. Believe me on that one; an Aston Martin can make you ecstatic only for so long before it becomes boring, 10000 sqf house can only hold a limited amount of ultimately worthless stuff in it. There is no beauty, knowledge, complexity or sense of heritage in that. Tell me, what is more fulfilling; to have 10 400 000$ a piece cars in your garage, and 10 whores on speed dial or a place you can feel calm in, your own island of sanity in a world which is more and more becoming clinically insane, is it more important to have 100 4000$ a piece suits in your closet than to be able to enjoy everyday conversation with people you stand in awe of and which can feed you their knowledge and their insight on a daily basis. You can not buy that, you can not rent it, you can only hope of it. 

Sat, 05/08/2010 - 13:56 | 338107 Caviar Emptor
Caviar Emptor's picture

The greed curve flattens as a function of saturation, age, experience and social trends. It goes viral the more people catch it. But it does burn itself out. 

Agree with you about personal fulfillment. But that's something everybody's gotta learn, they're not born knowing.


Sat, 05/08/2010 - 14:50 | 338182 cougar_w
cougar_w's picture

You are conflating the money with the lifestyle. There are ways to have that much money and not let it drive you crazy. There are ways to have no money at all but be driven crazy by a media-induced sense of inadequacy because you don't have $200 sneakers.

From either extreme, the answer is the same:

Clear. Your. Mind.

Sat, 05/08/2010 - 18:50 | 338413 nuinut
nuinut's picture


Sat, 05/08/2010 - 16:16 | 338246 jdrose1985
jdrose1985's picture

I agree totally.

"mo money, mo prollem"

Setting priorities in life is key. Our most valuable commodity as individuals which we all share on an absolute basis is time. We only have so much of it.

I am surrounded by a materialistic society full of people who use a majority of their time working a job they despise surrounded by equally despised people, to pay debt racked up to rent and hopefully pay off things in the hope they will fill the hole inside themselves. They neglect to make time to enjoy the small things which is where true happiness is found.

Find satisfaction in the small things in life and be wealthier than you ever could have imagined.

"I have seen servants upon horses, and princes walking as servants upon the earth." Solomon

Sat, 05/08/2010 - 23:21 | 338257 Comrade de Chaos
Comrade de Chaos's picture

I (they) call it the marginal consumption utility : ) Money could contribute to happiness ONLY when it is just a tool to achieve your goals. However I do agree the happiness is mostly linked to an achievement or certain success or other factors. The most important role of money for a person is the source of financial stability & security rather than the means to never ending self-satisfaction. Unfortunately most people fail to realize that.

And yeah, just money and never ending attempt of self satisfaction will never make someone happy, rather a bit obsessed and "slightly" insane.


Glad to see your wit in here. 

Sat, 05/08/2010 - 16:38 | 338284 Charlie J
Charlie J's picture

CheekyB is full of it.  ComradeDeChaos is more on target, that using money to achieve goals can be great.

I had nothing as a youngster, have a lot now.  Having a lot is better than having nothing.  There are so many things I can do.  Besides having the nice big house and the BMW Z-8, etc., when my niece needs money to help take care of her daughter with MS, we can just immediately send it, without checking our finances. At some point, every one of my 7 siblings has needed help from me (mostly to purchase homes). 

When I met some athletes from Cuba in L.A. one time, I took six of them to a local drugstore and told them to buy whatever they needed.  A couple of thousand dollars later, they were going home with inhalers for the asthmatic child, preparation H for hemorhoids, etc. etc.  They didn't buy one single trivial thing.

When a sports team of inner city girls couldn't get enough money together thru fundraising to be able to attend a national event, I covered the tab, and they had the time of their lives.  One went on to get a college scholarship.   I got some pretty sweet hugs.

I could go on and on and on.  The phrase "money can't buy you happiness" is the wrong way to look at it.  I would say instead, having lots of money can let you do some very, very interesting and gratifying things in your life.  My definition of success is not couched in terms of money.  It is:  you get to do what you want to do.  But think about it for a moment.  If you have enough money to be financially independent, won't that allow you to do what you want to do?  That, in my opinion, is a very, very good reason to try and get wealthy.

Sat, 05/08/2010 - 18:06 | 338350 Cheeky Bastard
Cheeky Bastard's picture

what you talk about is some form of charity without actually giving shit to charity. i have to given fuckton of money to a fuckton of fucked up people, but so fucking what. im not talking about that, what im talking about is that you can not accumulate your way to happiness [whatever the fuck happiness may or may not be] only to inner peace. when i got bored of the world, of the people and their trivial fucking ordinary bullshit i became a recluse and i put up walls [literal fucking walls, pretty high also] and secluded myself from their bullshit. that is the only thing that money provided me. ultimate isolation and seclusion, uninterrupted existence and indulgence in what i find valuable without outside interference. fuck everything else. i have my books, i have you people of ZH when i need an intelligent and out-of-the-ordinary mental stimulation and i have everything else at my disposal just a few phone calls away. what im trying to say is that money provides means of escape from the madness. sure, im not sane as it is, but my madness is the other kind of madness.

Sat, 05/08/2010 - 19:51 | 338475 Jendrzejczyk
Jendrzejczyk's picture

The only way I have ever achieved happiness in life was to set a goal, toil for months/years in misery until I achieved that goal. For a few minutes, you walk on clouds.

Sat, 05/08/2010 - 20:31 | 338504 Hulk
Hulk's picture

Same here CB. High walls, isolation, books, essentially created my own world to escape from the fucked up workaday, lack of good leadership world over here in the states.The ultimate escape for me will be when I actually cut the cord and move to the farm full time. Soon , tying up a few loose ends, be another year in the city, if we have another year...

Sun, 05/09/2010 - 03:28 | 338827 MaxPower
MaxPower's picture


As someone who's never really had any money, I'm fascinated by this discussion. Please, continue!

As a serious aside, my 5-year old daughter finds pure, altruistic delight in giving the homeless guy in the park across the street from us some water and a few bananas every day. You're welcome to come study under her tutelage; my wife and I are constantly learning from her!



Sat, 05/08/2010 - 15:05 | 338215 Psquared
Psquared's picture

I'm sad to say he is from South Carolina. Bennettsville or Dillon I think. He borrowed a calculus book from a library and taught himself because no one taught calculus in high school. I have a vague recollection that he had the highest SAT score that year from all SC High School college applicants - maybe one of the highest on record from the state.

Sat, 05/08/2010 - 12:48 | 338009 markar
markar's picture

and leaving the Euro and returning to the DM would vaporize a big chunk of Germany's debt.

Sat, 05/08/2010 - 12:59 | 338021 hedgeless_horseman
hedgeless_horseman's picture

Vaporize assets and liabilities.  I would guess the former is larger than the latter for The Huns.

Sat, 05/08/2010 - 13:09 | 338032 THE DORK OF CORK
THE DORK OF CORK's picture

How can anybody not be surprised to see sovereigns exploding when the central banks give effectively free money to banks and their hedge fund sisters to speculate to infinity and beyond.

The act of a sovereign country creating its own money is a abomination I suppose - the whole debacle is a sick joke.

Bankers have gone Bananas - they wish to crush civilisation to get a yield.

If Europe truly existed and was not just a figment of some royal wankers dreams then it would shut out New York and London from its capital markets

They have no real savings - so why leave these bozos speculate with fictional money.

I am sick to my stomach of these "Free Markets", free markets me arse.

Sat, 05/08/2010 - 13:18 | 338050 Mitchman
Mitchman's picture


Sat, 05/08/2010 - 13:26 | 338058 kaiten
kaiten's picture

That´s the name of the game, right now. Luring/scaring funds out of eurozone to finance the mammoth anglo-american borrowing needs.


Last year(2009) budget deficits:

eurozone - 6,3%

japan - 9%

US - 10%

UK - 12,3 %

Sat, 05/08/2010 - 14:45 | 338176 AnAnonymous
AnAnonymous's picture

In a consumption game, anyone saving, even relatively lose at the end.


Debt is the best and being able to go deeper and deeper into debt is even better.

Sat, 05/08/2010 - 13:43 | 338084 Implicit simplicit
Implicit simplicit's picture

Capitalism on leveraged steroids doesn't work.

Ireland had the same thing happen to them because of RE on steroids. I was in Galway visiting relatives with my family, 2 years ago; the cost of goods and gas were incredible. Has inflation tamed any there?

Sat, 05/08/2010 - 13:34 | 338068 Implicit simplicit
Implicit simplicit's picture

Europeans obviously will tighten their belts. The banks will be reluctant to lend. The bottom line is that the world GDPs will be calibrated down as the new normal forms, and continuesfor some time to come.

Likewise, Companies in general will face the same recalibration. Ultimeately, they will oscilate around a new mean that stock values will reflect, which is a lot lower than today.

Sat, 05/08/2010 - 14:04 | 338118 THE DORK OF CORK
THE DORK OF CORK's picture

There has been massive deflation in asset prices of course but also in the hospitality and tourist industry.

The price of a pint of beer is much cheaper

Unfortunetly we import nearly all of our energy due to a enlightened neo-liberal policey over the last decade or two, so costs such as electricity and liquid fuel remain high

There has been necessary extra taxes on fuel which has contributed to a massive trade surplus which is the only real difference between ourselves and Greece.

Sat, 05/08/2010 - 14:27 | 338152 Implicit simplicit
Implicit simplicit's picture

Unlike Greece, I beleive Ireland is more effective at collecting taxes.

Sat, 05/08/2010 - 14:40 | 338169 THE DORK OF CORK
THE DORK OF CORK's picture

Its simple really you just tax beer.

Sat, 05/08/2010 - 14:53 | 338189 cougar_w
cougar_w's picture

LOL. A tax on being miserable.

And it's self-reinforcing: the worse the economy gets, the more taxes you bring in.


Sat, 05/08/2010 - 15:07 | 338220 THE DORK OF CORK
THE DORK OF CORK's picture

Talking to a German Guy on the Max Kaiser site and suggested if they give us one week euro tokens instead of 30 year mortgages we will promise to spend all our tokens on German Beer.

The credit risk would be almost zero as you could roll over the debt very easily and  also both populations would be happy.

The Germans would have nice deposits and a export surplus while we can remain happy and poor. It would be a symbiotic relationship.

I feel the euro is having problems due to cultural misunderstandings but it can worked out.

We can do this.

Sat, 05/08/2010 - 15:49 | 338250 moneymutt
moneymutt's picture

greece is effective at regressive taxes, but taking upper middle class and rich, it does not...Ireland taxing is more progressive, not hard to be...

Sat, 05/08/2010 - 18:36 | 338384 Dburn
Dburn's picture

Their tax rates are so low that's why they had a Dubai look. Which in turn made Ireland a shining example for  low tax /no tax advocates of a prospering country because corporations paid no taxes ( which is not much different here) and there was only a 5% tax on income over 50G. They depended on a consumption tax which was fine when people were consuming but nevertheless they still never brought Govt spending in line with their low taxation policy that lead all those fine American firms to open there.The people seemed to want all the good things now too.

I guess when total corporate taxes are less than 1/2 percent of GDP here , you just can't resist going that other have 50 BPS. The bullshit of 35% tax rates on corporations is just another way of saying that the well endowed are paying the freight around here and therefore should be running the joint. The reality is on the Gov tax revenue collections break-out which tells an opposite story and on the mountains of cash sitting on corporate balance sheets doing nothing but waiting. 


They aren't doing anything stupid like spending 480 Billion for stock buy backs in 2007 when the Dow touched it's all time high. R&D? Snort. The C-Suite execs have been heavy sellers of stock since last summer. The only buyers were new directors with their token 1000 share buys that most likely came in in the form of a corporate loan that was promptly set-off by a bonus .

What's it all mean, with countries shriveling up as corporations sit patiently squeezing every last cent out of the remaining workforce, lowering bad loan reserves and filling up on fed money adding up to mountains of cash to be placed in banks that fuck with derivatives somewhere off-shore as Executives are converting exercised options into cash and waiting? That's where the power lies and their enablers in Congress on both sides of the Aisle will also get their share of cash .

It sure looks like they know when the Category 5 hurricane will be coming . Maybe not the exact date, but I'm certain a little jaunt down to 500 or less won't concern them a bit. Keep your eyes peeled as the C-Suite execs get rid of all but token bits of stock. That's when game time is close. AS CB said he can't spend it in 10 lifetimes, but unlike him or her the thirst for more power at that level can never be quenched. Jamie Dimon's pronouncement that corporate America "has never been stronger" might be looked at in a new context as the developed nation's implode trying to keep them happy.

Sat, 05/08/2010 - 15:09 | 338223 Psquared
Psquared's picture

I read "Angela's Ashes" and saw the movie a few years ago. That, and "Grapes of Wrath" should be mandatory reading for those who wish to see what "could" happen in the next 12 months in some EU countries and to the rest of the world in 24-36 months.

Sat, 05/08/2010 - 15:21 | 338233 THE DORK OF CORK
THE DORK OF CORK's picture

The guy was a turd - the reality of existence is never that bad, people use humour to get through life - he had no sense of fun.

Richard Harris the actor hated Frank McCourt guts as he was a neighbour and always stated that McCourt was over the top with his misery porn

You just deal with it I guess although some cannot.

Sat, 05/08/2010 - 14:00 | 338110 Caviar Emptor
Caviar Emptor's picture

The life cycle of Empire inevitably reaches the overextended phase and begins to contract.

Sat, 05/08/2010 - 14:54 | 338194 cougar_w
cougar_w's picture

Ah. But whose empire is it this time?

Sat, 05/08/2010 - 14:00 | 338111 zeroman
zeroman's picture

Interesting Read.  I believe things will have to get much more scarry to the american people before the Fed will be able to do the obvious.  The fed will simply provide the buyer of last resort for european bonds and most likely soak up 500B to 1 Trillion E bonds. This will be well hidden from most niave people by using the IMF.  However, this cannot happen until literally the FEAR is BACK BIG.  This will result in the stock market crash.  Ultimately, i think this is all planned.  Europe needs a lower currency to compete, period.  America needs buyers for its massive debt.  Hence, we have a marriage.  Who will be buying our debt as we buy up their debt?  You got it!! the ponzifinancial system is in worldwide force.  The fed will hold their crap on its secret books and financial reform for the Fed will be nullified so as not to expose the public to the fraud.  Hence, the Fed will keep its secret independence.  All will be done to save the world.

Sat, 05/08/2010 - 14:01 | 338112 Caviar Emptor
Caviar Emptor's picture

This phase of the crisis will reveal just how blurred is the line between public and private, even in a self-professed ultra capitalist economy. 

Sat, 05/08/2010 - 14:03 | 338116 Kayman
Kayman's picture

Of the choice of borrow or print, they first chose to borrow- let someone else pay today's current consumption-after all, a generation has "prospered" from buy now, let someone else pay later.

With Fractional Reserve banking and Wall Street banks effectively not requiring reserves, we have now created unrepayable debts- the world economy cannot grow enough to carry all the debt. Borrowed money has gone and is going into current consumption not long lived assets.

So, we are back to the ugly choice of the Fall of 2008- either continue to pump fresh blood into the rotting, stinking corpse in Wall Street, London, etc. or get rid of the unproductive Leech sector of the economy. It is no longer serving the role of financial intermediary between borrowers and savers.  It is entirely an unregulated financial casino.

The Dow has as much relevancy on a daily basis, as measuring the fleas on a dogs back.

Everyone's retirement, etc, depends on a productive real economy, not how many times a country can play patty cake with dishonest paper.

Of course, we can always go with the Zimbabwe solution.

We cannot print, borrow, or hide from this one.

Sat, 05/08/2010 - 14:07 | 338125 Caviar Emptor
Caviar Emptor's picture

As the crisis progresses through successive phases there will be a growing credibility gap regarding parental public institutions like the Fed, IMF, ECB and cascading on down. That alone raises the cost of capital and lowers the panic threshold.

Sat, 05/08/2010 - 14:07 | 338128 Mr.Kowalski
Mr.Kowalski's picture

Lets see what the EUrocrats do this weekend; they've promised "shock and awe".. even of it's €600 billion as rumored, how long will this last ?? In fx & bond markets as well as banking leverage, this is a spit in the bucket.

Lehman 2.0 has arrived folks.. strap on the seatbelts..



Sat, 05/08/2010 - 14:23 | 338150 cbaba
cbaba's picture

Thank you Tyler, excellent work.

Problems will never go away and the main cause of all problems is excessive QE in all world, lack of a money standard based upon something which cannot be printed like Gold.


Sat, 05/08/2010 - 15:00 | 338205 cougar_w
cougar_w's picture

Arte Johnson: "Veeeeery interesting --- but not funny."


Sat, 05/08/2010 - 15:29 | 338237 Comrade de Chaos
Comrade de Chaos's picture

I found something very, very, very amusing the other day:


Fin Asian Crisis of 97 - 98 Timeline:


It has similar statements, similar bluff, similar waves of denial and acceptance to our current overseas debt crisis. The only discretion (about 1997 coverage above), they mention the reasons are unknown or speculators without indicating that national DEBT in some of the countries involved has doubled in several years. 

Sat, 05/08/2010 - 15:39 | 338243 onlooker
onlooker's picture

The inability of the average citizen to understand the economic system, which is a governing factor, renders us unable to self govern in a responsible manner. The rule of not having the public too well educated or too well informed is an old rule. Here, we find a bold step in the correct direction. I am telling my friends to tune in to the Zero. It may not make a person sleep better, but it is still good for you.

Sat, 05/08/2010 - 15:54 | 338254 Psquared
Psquared's picture

Don't worry, they have everything under control.

Europe’s failure to contain Greece’s fiscal crisis triggered a 4.3 percent drop in the euro this week, the biggest weekly decline since October 2008. And it prompted the U.S. and Asia to rally around in a bid to prevent a global sovereign-debt crisis from pitching the world back into a recession.

“Europe is getting its act together,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Time will tell if this statement is enough to satisfy the European bond market vigilantes.”

European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the European Union’s central authorities with guarantees by national governments. Finance ministers will meet at 3 p.m. tomorrow in Brussels to flesh out the details. A press briefing is scheduled for 6 p.m.

Don't the Japanese markets and futures markets open about that time. Funny how they manage to do these things on Sunday afternoons isn't it!!??

Sat, 05/08/2010 - 20:37 | 338510 Ras Bongo
Ras Bongo's picture

Italy should be fun to watch in June and Spain in July.

Sun, 05/09/2010 - 01:17 | 338752 youngandhealthy
youngandhealthy's picture

* Europes total sovereign debt to GDP is 6,3%. US is 12%

* FED is doing massive QE, ECB is not (besides token pgm on covered Bonds).

* FED is even buying UST Bonds (directly and through PDs) not just crap Bs.

* USA quota of IMF is 17%....Europes (€) is 24%

* Most of the ZH comments confuse money being lend with Bonds as collateral and outright buying of Bonds. UST will never buy Greece bonds never will the German Bund, Länder or gemeinden

* Most US citizen does not understand the purpose of €. It is Political and nothing wrong with that because the main thing is to avoid war between Euro countries. Take Estonia as an example....They do whatever they can in terms of austerity pgms and more to become a €-citizen. The sole reason for that is to finally avoid the grip of Russia.

 * All USA internal (war) problems disappeared with the 90 year process of unite around the Dollar.

* The € is here and it will be here as long as the USD is here. If both disappear I dont want to be here no more. Thats Armageddon people.

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