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Trichet echoes Merkl's call for a fiscally united Europe

Cheeky Bastard's picture




 

Echoing Angela Merkls call for a more united Europe, European Central Bank president Jean Claude Trichet issues his own view on the current crisis within EMU. In an interview with German newspaper Der Spiegel, Trichet calls for further fiscal and monetary consolidation of EMU countries.

Talking about the current EMU crisis, which he characterizes as "the gravest crisis since World War I" , he calls for further financial consolidation which, he hopes, would stabilize the economies of the members of EMU.

Issuing a harsh criticism against the markets Trichet says the following: "Die Märkte funktionierten nicht mehr, es war fast wie nach der Lehman-Pleite im September 2008."; saying the mechanism of the market is currently broken and the behavior of market participants is similar to the behavior experience when Lehman Brothers filed for chapter 11 back in 2008.

Trichet also warns about the speed of contagion spread, which he says could happen in the matter of hours, and leave supervising institutions no time to react in an appropriate manner. I, for one, fully understand his concerns since we have witnessed parabolic moves in the FX markets during nights when it is unclear how will the market react the next day.

It is almost impossible to assess the direction of the next trading session, not even by observing index futures, or for that manner, FX market. And with wild swings in the derivatives market, which is experiencing volatility rarely, if ever, seen before the direction in which the market will trade during the trading session changes by the hour.

Consolidation, which he calls "einen Quantensprung in der gegenseitigen Überwachung der Wirtschaftspolitik in Europa", or " a quantum leap in the mutual surveillance of economic politics in Europe"., was the only viable and enforceable solution since it has been demonstrated, more than once, that the members can not, or will not, enforce necessary fiscal measures.

Also, one of the highlights of the article is the hilarious statement by Angela Merkl where she says: " I have full confidence in European Central Bank. It has acted quickly and responsibly during the current banking crisis and kept the EURO stable."

 

*cough*

              Chart forEUR/USD (EURUSD=X)

                                   pictured: stable EUR [Thanks a bunch Jean Claude]

 

But fear not; swaps have not yet been deployed, and we all know that Bernanke will not allow deflation to reign against any currency, in any asset class.

 

Full article [both in German and translated]:

Nie wieder eine solche Krise: Der europäische Zentralbankpräsident Trichet ruft die Euro-Staaten zur Ordnung. In der "vielleicht schwierigsten Situation seit dem Ersten Weltkrieg" müssten sie endlich ihre Finanzpolitik konsolidieren, sagte er dem SPIEGEL - und bekommt Unterstützung von Kanzlerin Merkel.

 

Frankfurt - EZB-Präsident Jean-Claude Trichet vergleicht die Situation der Euro-Staaten zum Ende vergangener Woche mit der Zeit kurz nach dem Ausbruch der Finanzkrise: "Die Märkte funktionierten nicht mehr, es war fast wie nach der Lehman-Pleite im September 2008." Man befinde sich "zweifelsohne" noch immer "in der schwierigsten Situation seit dem Zweiten Weltkrieg, vielleicht sogar seit dem Ersten", sagte der Chef Präsident der Europäischen Zentralbank dem SPIEGEL. "Wir erlebten und erleben wirklich dramatische Zeiten."

Im Markt besteht Trichet zufolge "immer die Gefahr einer Ansteckung.

 

Und es kann extrem schnell gehen, manchmal innerhalb weniger Stunden." Der EZB-Präsident fordert jetzt "einen Quantensprung in der gegenseitigen Überwachung der Wirtschaftspolitik in Europa". Es brauche "wirksame Sanktionen bei Verstößen gegen den Stabilitäts- und Wachstumspakt." Die EU-Regierungschefs hätten am vorvergangenen Freitag umfangreiche Sparprogramme zugesagt: "Sie haben sich verpflichtet, die Konsolidierung der Haushalte zu beschleunigen. Sie wissen, was auf dem Spiel steht."

 

Trichet verteidigte die Unabhängigkeit seiner Institution vehement. Zu der umstrittenen Entscheidung der EZB, erstmals Anleihen bedrängter EU-Staaten aufzukaufen, sagte er, nicht die EZB sei schwach gewesen, sondern die Regierungen mit ihren hohen Schulden: "Mitnichten haben wir den Staats- und Regierungschefs nachgegeben. Bei unserer Entscheidungsfindung fließt allein unsere eigene Beurteilung der Situation ein. Wir hören nicht auf die 'Empfehlungen' der Regierungen, Märkte und Tarifparteien", sagte der EZB-Präsident. Dass die Maßnahmen inflationär wirken können, leugnete er: "Wir schöpfen die zusätzliche Liquidität wieder vollständig ab, jeden einzelnen Euro." Trichet trat auch dem Eindruck entgegen, dass sich die Geldpolitik geändert habe: "Wir haben nie eine Sekunde gezögert, die notwendigen Entscheidungen zu treffen, um Preisstabilität zu gewährleisten."

 

Merkel: "Staatsfinanzen in Ordnung bringen"

 

Angela Merkel hatte schon am Donnerstag wie Trichet die Euro-Krise eine der größten Herausforderungen der vergangenen Jahrzehnte genannt. Man stehe vor der größten Bewährungsprobe seit dem Zusammenbruch des Kommunismus - wenn der Euro scheitere, "dann scheitert Europa, dann scheitert die Idee der europäischen Einigung". Die Kanzlerin pflichtet nun in einem Interview mit der "Süddeutschen Zeitung" auch Trichets Problemanalyse bei. "Das eigentliche Problem sind insbesondere die hohen Haushaltsdefizite in den Euro-Ländern", sagte die CDU-Chefin.

 

Der Rettungsschirm für den Euro nur eine vorläufige Lösung.

Deutschland bestehe darauf, dass das "Problem bei der Wurzel angepackt werden muss, das heißt, dass die Länder die Staatsfinanzen in Ordnung bringen und sich um eine bessere Wettbewerbsfähigkeit bemühen müssen", sagte Merkel. Sie forderte wie Trichet eine stärkere Verzahnung der Haushalts- und Wirtschaftspolitik in Europa. Dabei "dürfen nicht die Schwächsten die Entschiedenheit bestimmen, sondern die Stärksten, damit es gelingen kann", sagte sie. Sorgen vor einer Inflation trat Merkel auch entgegen: "Ich habe volles Vertrauen in die Europäische Zentralbank. Sie hat auch bereits in der Bankenkrise verantwortungsvoll und schnell gehandelt und den Euro stabil gehalten."

 

 

 

Never again such a crisis: the European Central Bank President Trichet that euro-zone countries calls for order. In the "perhaps the most difficult situation since the First World War," they would finally consolidate their fiscal policies, "he told SPIEGEL - and gets the support of Chancellor Merkel.

 

Frankfurt - Bank President Jean-Claude Trichet compares the situation of the euro countries by the end of last week with the period shortly after the outbreak of the financial crisis: "The markets do not work anymore, it was almost like after the Lehman bankruptcy in September 2008. " One is at "no doubt" still "in the most difficult situation since the Second World War, perhaps since the first" said the head of the European Central Bank President SPIEGEL. "We had to do really dramatic times."

In the market there, according to Trichet, "always a risk of infection. And it can go very quickly, sometimes within hours.

 

The ECB president now calls "a quantum leap in mutual surveillance of economic policy in Europe".

It needed "effective sanctions for breaches of the Stability and Growth Pact." The EU leaders had agreed on before last Friday extensive savings programs: "You have undertaken to accelerate the consolidation of households. You know what is at stake."
Trichet defended the independence of the Bank vigorously. To buy the controversial decision by the ECB, a first issue distress EU states, he said the ECB was not weak, but the governments, with their high debt: "By no means have we given in to the Heads of State and Government. flows In our decision but our own assessment of the situation. We do not listen to the 'recommendations' of the governments, markets and collective bargaining, "the ECB president.That measures inflationary effect may deny it: "We fully back the extra cash draw down, each one euro."

Trichet was also contrary to the impression that monetary policy had changed: "We have never hesitated one second to take the necessary decisions to ensure price stability."

 

Merkel: "bring state finances in order"

 

Angela Merkel had already named on Thursday as Trichet, the Euro-crisis one of the biggest challenges in recent decades. We stand at the biggest test since the collapse of communism - if the euro failed, "then fails Europe, then fails the idea of European unification". The Chancellor concurs now in an interview in the "Sueddeutsche Zeitung" also Trichet problem analysis. "The real problem is in particular the large budget deficits in the euro-countries," said the CDU leader.

 

The rescue system for the euro only a temporary solution.

Germany insists that the "problem must be tackled at its root, that is, bring the countries of the state's finances in order and seek to increase competitiveness must," said Merkel. It asked how Trichet a closer connection between the budget and economic policy in Europe. It "may not determine the decisiveness of the weakest but the strongest, so that it can succeed," she said.Worries of inflation was also contrary to Merkel: "I have full confidence in the European Central Bank. It has also been in the banking crisis acted responsibly and quickly and kept the euro stable."

 

For a better picture of what lays ahead for all European markets consult with the following article 

 

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Sun, 05/16/2010 - 11:56 | 354675 kane1559
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"In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. But if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?"


Sun, 05/16/2010 - 10:42 | 354593 Crab Cake
Crab Cake's picture

Financial Consolidation

Finances don't, and won't consolidate, without loss of sovereingnty.

Loss of sovereignty appears to be the endgame for TPTB in all this.  (Euro nation busting, SDRs, etc...) It seems that events are moving us towards the next step of hyper globalism and the death of national sovereignty , or the globalist plans imploding into chaos and perhaps a new dark age.  Tyranny or Mad Max; wonderful.

Sun, 05/16/2010 - 10:11 | 354560 tim73
tim73's picture

WE MUST HAVE ZE ORDER! JA! Greece is a naughty boy...spanking, ja!

Sun, 05/16/2010 - 10:03 | 354552 hooligan2009
hooligan2009's picture

Hmmm..as far as I know, Trichet is not an elected politician and represents no-one. He is a civil servant/banker who's job was to control inflation using interest rates and whose job was expanded to compel banks to take money at 1% for all terms (including the compulsory purchase of Euro by the US at 1%) and whose job has now been expanded somewhat to (previously illegal) buy most of the debt issued by all European goverments.

He is an old man with an eye on retirement on a nice fat pension. He is not part of the solution that will evolve over the next decade and is not one of the few "benevolent dictators" of Europe. He may look sensible and harmless, but that is what he is, a sensible and harmless civil servant banker with no responsibility for changing anything. Merely perpetuates the corrupt and broken financial system in much the same way as Bernanke, King and Shirakawa.

Sun, 05/16/2010 - 08:08 | 354461 ConfederateH
ConfederateH's picture

The daily bell has a piece on this titled "As Predicted EU Leaders Seek US of Europe".

http://thedailybell.com/1049/As-Predicted-EU-Leaders-Seek-US-of-Europe.html

The Euro-elite want US-Feds style control over the plebians.  I think they will have to have their civil war before they get it.  If the Yurps allow themselves to become slaves to a EURS like Americans are to the IRS, then they are fools.

 

Sun, 05/16/2010 - 07:35 | 354433 tip e. canoe
tip e. canoe's picture

"Enlightened, informed dialouge."

catch this echo from across the pond and send it over the other.

cheeky, thanks for posting again on the regular.   your writings inspire everyone to take it up a notch and i for one am humbled by the multi-dimensional intelligence displayed.

this if nothing else gives me hope.

Sat, 05/15/2010 - 23:08 | 354248 Oh regional Indian
Oh regional Indian's picture

What a great comment thread gentlemen (don't see any ladies on it).

Enlightened, informed dialouge.

Awesome!

Jut to pick on the one line (or two) Cheeky said about India, I say forget India. It is a lost nation and said tata/ambani et. al. are just stooges, bouyed by vast amounts of foreign direct investment, being that they have showed for decades (and overa century in tata's case) that they will bow to the masters wishes. Same for Mittal of steel fame.

Mainstream India is being led like lambs to the proverbial Slaughter.

And we are speaking of one sixth of global pop here. Sad.

Throw in China's equally moral and hap hazard filled growth and you have fully a third of humanity not really having a true voice in things/times to come.

Meanwhile, after decades of being pro-pakistan, the US is suddenly our best friend and we are buying nuke tech and arms and boeing AWACs and ....list goes on. Fully primed by loans.....loans and more loans.

It's been a loanly world of late and it's going to become a lonely one soon....ish.

Stay even so you don't feel odd when the ground shakes.

Sat, 05/15/2010 - 22:31 | 354214 walküre
walküre's picture

Standard Oil is crashing the Euro. That's all there is to it.

Sat, 05/15/2010 - 22:12 | 354195 putbuyer
putbuyer's picture

This just pisses me off. I have so many family members in Europe. They are all drones - never knowing true freedom. They will soon know tyranny of the worst kind. Rise up you idiots.

Sun, 05/16/2010 - 10:14 | 354563 tim73
tim73's picture

Like in Arizona, "Show me the fucking papers and NOW!" or the free speech zones, guarded by SWAT teams? Oh America, Oh America, the land the of the free and brave!

Sun, 05/16/2010 - 10:28 | 354581 overmedicatedun...
overmedicatedundersexed's picture

Show me the fucking papers and NOW!"

>>>>>>>.....

perhaps you should read the law.

Sat, 05/15/2010 - 22:12 | 354193 Between The Lines
Between The Lines's picture

The fiscally healthier EU countries have good reason to leave the EU now and divorce themselves from fiscally doomed countries. If instead they are going to say that the EU cannot fail, this tells me that TPTB may very well be trying to implement a NWO/OWG.

Sat, 05/15/2010 - 21:51 | 354169 Careless Whisper
Careless Whisper's picture

The concept of the Euro was flawed to begin with. Each sovereign nation has its own self-interests.

The Bilderbergers goal is to have one world currency that their central bank controls. The Euro is just one step in a long process to get there. The collapse of the Euro is a victory over tyranny.

 

Sat, 05/15/2010 - 21:29 | 354150 Bazza McKenzie
Bazza McKenzie's picture

Whilst I accept there may be some leaders in Western countries and the US who are hot for a NWO and a single currency, it ain't gonna happen.  The thing its proponents never bargained for was the growth of China.  China, which for millenia has thought of itself as the centre of the world, was forced to have a few bad centuries at the hands of Europe, is now eclipsing Europe and has far more upside yet.

It's economic progress may be somewhat overstated, but only somewhat. There is not the least doubt that over the last decade its economy has grown enormously while that of Europe and the US have, if anything declined, as their politicians chose to live on credit while suppressing and exporting their productive capacity.

Anyone who imagines China is now going to subordinate itself to some NWO is off with the pixies.  The same goes for India, though it is at present less important and less assertive than China.

Remember the great UN AGW lovein at Copenhagen.  Sunk by China, not by the US or Europe.  China simply said "we're not interested in your deal, get lost".  Obama was made to wait on China, and ran around in circles, as did the European leaders and it made not a whit of difference. China did what it wanted, in its judgement of its own best interests, and the rest were shown up as ineffectual fleas.

While there are differences and debates within China, there is an enormous Chinese nationalism, and if it comes to the worst, the country will put up with great hardship.  There is no European nationalism, it is all country or even regions and ethnic groups.

China is not governed by Western banks, with the murky past of those who control them.  Western financiers may play a big part in affecting what happens in European and US economies.  There is great ethnic similarity and affinity between those controlling finance in Europe and the US.  There is none between them and those controlling finance in China and, in the main, India.

Add to this Russia.  Russia, like China, has reverted to its historical character.  Don't be confused by their brief and damaging flirtation with socialism, aka communism.  Both are historically statist powers, though Russia has a long history of being ruled by powerful emperors, now Putin. They do not subordinate themselves to anyone else, unless it is imposed by physical force or as a tactical step to achieve their own ends.

No doubt Bernanke, Trichet and co will attempt to create more of a festering web controlled by them.  They may succeed in part, but not globally.

Also watch for the eventual reaction by Germany. The country that is the largest, most economically powerful and disciplined is being subordinated to the profligate members of Europe. Merkel is seen as a weak leader, now acquiesing in the looting of Germany by France, she will be displaced.  Historical animosities and suspicions run deep in Europe.  It is now 65 years since the end of WWII. Most Germans no longer feel personally responsible for that event and are no longer willing to be saddled with guilt to appease their neighbours.  That constraint on German assertiveness, which worked for a few generations, is now being dissolved at precisely the time its neighbouring countries are attempting to increase what they can take from Germany.  This will get very, very messy. It will not work out the way the NSWO protagonists will like.

Sun, 05/16/2010 - 02:36 | 354341 Oh regional Indian
Oh regional Indian's picture

Hey Bazza, please see my comment at the end of the thread, but to put it somewhat mildly...

China and India are completely/totally/mercilessly under the same boot-heel as the rest of the world. And I say that with deep experience (indirect with china and direct with India, at every level, business, military and government).

We have to go back a lot longer in history to see who is pulling the purse-strings (the only strings that ever counted in this era)in these two countries.

Indo-China was once a common phrase eh? French Indo-china. British Indo-china, opium wars......, china dealing left right and center with agression/treaties with the Japanese, russians, british...

All the same hands put puppets in power, whose puppet children went with the flow of the expected dominant form of mal-governance, Russia-Stalinism/marxism, china Maoism/marxism, India monarchism masquerading as democracy.

Shell games within shell games. Layers of an onion. Call it what you may, but today is a longggggg echo of yesteryear.

Sat, 05/15/2010 - 21:10 | 354127 hedgeless_horseman
hedgeless_horseman's picture

Darwin works quickly; this latest generation of Europeans are such pacifists.  I would have thought we would start to see republican/nationialist/seperatist actions by now, given the weakness in the traditional powers. 

Here, I see bumper stickers with the Texas flag and the word secede, but only rarely.  Mostly, I see nothing but flowers.

http://www.google.com/url?q=http://popup.lala.com/popup/360569522479234422&ei=-kXvS93EIJnctAPVsO2wDw&sa=X&oi=music_play_track&resnum=1&ct=result&cd=2&ved=0CBMQ0wQoADAA&usg=AFQjCNFNZ-Tm3LGJhmWQ7rf1YpcnKcjzLw

Sat, 05/15/2010 - 20:42 | 354080 Invisible Hand
Invisible Hand's picture

Interesting article, Thanks, CB.

Firstly, no European country bigger than a football field with a two man army is going to yield national control over their tax and spending policy to any European-wide body.  They are more likely to do so with the IMF as every hates the IMF but the general impression seems to be it is smarter and more powerful than God, and a lot more vengeful.

The Greeks (to use just one example) would rather torch their entire country (and may) rather than let the Germans, or French, or Italians, etc. tell them how much to tax and spend.  Once the politicians give up control over taxing and spending, they are just clerks, they have no gifts to give to friends and no weapons against enemies.

Pigs will not only fly first, they will land on (and colonize) the Moon and Mars first.

Similarly, while I have no doubt that the UN and Obamiacs would love a New World Order (where they were the ruling class, of course, as is their right as the smartest people in the universe--known universe, at least).

However, the entire planet cannot agree on a single measurement system that would greatly facilitate commerce, science , engineering, etc. (Remember the satellite that disappeared because one group at NASA was using metric and the other English--i beg your pardon, standard--units).

How in God's (Yaweh's, Allah's, Krishna's--you get the picture) name are we going to be able to agree on something as emotional and life changing as a single world currency?  Maybe after WWXXIX, the last three people alive with agree on a world government, and then promptly kill each other over who gets the top spot.

Just my view...

Sun, 05/16/2010 - 08:01 | 354455 Mercury
Mercury's picture

I agree, a European mono-state  will never fly as it essentially would mean countries who more or less have their shit together dictating terms to those that don't.  Besides, how exactly is this "quantum leap in the mutual surveillance of economic politics in Europe" going to be enforced?  Most of these countries didn't allow their armies to do much more than plant gardens in Afghanistan but they are going to storm trooper there way through their own people and smack down resistance? Please.  I'll put my money on the angry, rock throwing Greek bureaucrat who's about to have his lunch taken away.

Another one of those moments in history where Switzerland is probably pretty damn happy to be doing its own Swiss thing. Just don't understand why they recently folded on bank secrecy.

Also, gold (or gold-backed paper) is the obvious universal currency or means to universal parity and it will probably happen all by itself.

Sat, 05/15/2010 - 18:07 | 353876 ZackAttack
ZackAttack's picture

Yeah, that was the money quote (CR has a posting on it):

 

 since September 2008 we have been facing the most difficult situation since the Second World War -- perhaps even since the First World War. 

 

That's so far past offensive. I'm going to be polite and not say how that actually makes me feel.

Sat, 05/15/2010 - 17:19 | 353853 Lionhead
Lionhead's picture

CB, thank you for posting this most important article from Europe along with the English translation. This admission from the Euro leaders that they are at the tender mercies of the markets shows their inability to confront their problems or a viable solution other than the standard Keynesian model to throw more money at the problems.

They are actors in the Euroland kubuki theater, only they have no idea of what their lines are, or where they're going. In the mean time, capital flows at the speed of light & can crush them at anytime in the future while they dither around on stage in complete confusion.

A quote from Martin Armstrong expresses their predicament:

 

"The Euro is acting like gold during the great depression. It has cut off the option

of devaluation of the currency as the only alternative to permanent default on the debt.

In 1931, most of Europe defaulted because they could not repay their debts in gold.

Now it is the Euro instead of gold. It is the same crisis, just with a different twist

This is forcing austerity and that is more likely-than-not, going to cause civil unrest

that can lead to revolution." 

 

So, they call for unity, when in fact the break up of the EMU is the solution. The politicos & their central bank enablers are going to commit suicide to retain their powers. It will never work. Moreover, when they go down, the US will face the same fate. We have no leadership here to do what must be done.

Please keep these posts coming from Europe. You are the man of the hour, Cheeky. I wish you good health.

 

Sat, 05/15/2010 - 17:03 | 353833 pak
pak's picture

"...and kept the EURO stable."

THAT was hilarious. I know for fact that Bob Mugabe never cared about the ZWL rate because his wife Grace never ran out of USD for shopping.. but Oma Merkel??

"The real problem is in particular the large budget deficits in the euro-countries."

Nein, Frau Kanzlerin. The real problem is that nobody ever knew what kind of "unified Europe" you eventually wanted to build, and that's why you have such a lame monetary union.

Sat, 05/15/2010 - 16:06 | 353793 wang
wang's picture

I think you or he meant to say WW II??

"Trichet calls for further fiscal and monetary consolidation of EMU countries. Talking about the current EMU crisis, which he characterizes as the gravest crisis since World War I" 

 

EDIT - I just read the original, he said WWI - is Trichet  totally insane?

 

 In der "vielleicht schwierigsten Situation seit dem Ersten Weltkrieg" 

 

Sat, 05/15/2010 - 22:48 | 354224 AUD
AUD's picture

No, Trichet obviously knows what he was talking about, which means you shouldn't trust him further, much further, than you can throw him.

It was the abrogation of the gold standard to 'finance' the First World War that has led us to where we are today and everything in between. That is to say the abrogation of the obligation of issuers of paper 'money' to redeem it.

Sat, 05/15/2010 - 21:56 | 354174 jeff montanye
jeff montanye's picture

it certainly makes you wonder.  but, literally, the french nation suffered more in ww1, when its army actually fought, than in ww2.  however to pass off ww2 as not as bad as now makes me wonder what trichet knows that we don't.

Sat, 05/15/2010 - 12:56 | 353674 Gunther
Gunther's picture

IMHO there is at least one additional variable, the savers loosing trust in the respective currencies.
In Germany is growing distrust in the Euro and to some extent a vote of no-confidence in the Euro by buying gold and foreign currencies.
Few years ago Japanese housewives moved the currency markets; if they read the chart of gold in yen
the POG broke out recently. Ambrose Evans-Pritchard stated a year ago that in Japan a different charting method, called Ichimoku, is commonly used. If that method gave a buy signal for gold and the housewives start to buy the shorts might get smoked. Back then I found my Dow-theory-based trading system easier and faster so I did not check the Ichimoku more closely.  
Back to Europe, the risk not factored in by ECB and politicians is that savers run to the bank and get out of Euro.
If someone or their parents experienced a currency reform and loss of savings the psychology towards inflation and soft currency is very fearful. To get an idea of the German mood watch http://www.zdf.de/ZDFmediathek/beitrag/video/1041186/Neues-aus-der-Ansta...
(in German)
The astonishing thing is that the commedians are reporting more the the news; moreover the commedians are more of an opposition then joking. It looks almost like they were reading ZeroHedge.

Sat, 05/15/2010 - 12:39 | 353657 JR
JR's picture

EUROPE’S FISCAL FASCISM BRINGS BRITISH WITHDRAWAL EVER CLOSER by Ambrose Evans-Pritchard

Just when you thought the EU could not go any further down the road towards authoritarian excess, it gets worse.

The European Commission is calling for EU powers to vet budgets of the 27 member states before the draft laws have been presented to the House of Commons, the Tweede Kamer, the Folketing, the Bundestag, the Assemblee Nationale, or other national parliaments. It applies to Britain even though we are not in EMU.

Fonctionnaires and EU finance ministers will pass judgement on the British (or Dutch, or Danish, or French) budgets before the elected bodies of these ancient and sovereign nations have seen the proposals. Did we not fight the English Civil War and kill a king over such a prerogative?

Yet again we are discovering the trick played on our democracies by Europe’s insiders when they charged ahead with EMU, brushing aside warnings by their own staff economists that monetary union was unworkable without fiscal union. Jacques Delors knew perfectly well that this would lead inevitably to a crisis, but it would be the “beneficial crisis” that would force sovereign parliaments to submit to demands that they would never otherwise accept.

This is now playing out before our eyes. Club Med governments have built up €7 trillion sovereign debt under the cover of monetary union, which shut down the warning signals for borrowers and creditors alike. We are now near – or beyond – the point of no return. Eurozone states must go along with this cynical entrapment, or risk economic catastrophe. The conspirators have succeeded. The €750bn shock and awe package agreed over the weekend clearly alters the character of the European Project, crossing the line towards an EU debt union and an EU Treasury. How long will it be now before the EU acquires direct tax-raising powers?

As French president Nicolas Sarkozy said: “We have a veritable economic government.”I hope the excellent and proud French people realise what this means before it is too late, as it is for the Greek, Irish, Portuguese, and Spanish peoples. They are being forced by the logic of the economic machine to squeeze fiscal policy at a time when they are either in recession or trapped in a deeper perma-slump without offsetting stimulus. A Deutsche Bank note to clients said these countries have given up all three instruments of economic control: fiscal, monetary, and exchange. They are powerless. We are under an “EU protectorate”, said Spain’s opposition leader Mariano Rajoy last week, though it was empty, useless rhetoric since he does not draw any of the necessary conclusions from this intolerable state of affairs.

Read more…

http://www.lewrockwell.com/orig10/evans-pritchard28.html

Sarkozy 's suggestion that Europeans can prosper without national economies, reminds me of Mohammed Ali's famous comment to a stewardess: "Superman don't need no seatbelt."  And the stewardess' reply: "Superman don't need no airplane, either."

Sat, 05/15/2010 - 12:50 | 353666 Cheeky Bastard
Cheeky Bastard's picture

Thank you for the link, but Evans-Pritchards predicted 47 out of 0 things that did not happened. I stopped reading him long while ago. Typical Tories bullshit about Anglo-Saxon exceptionality. Said belief makes them heavily subjective when it comes to evaluating external structures. Pritchards is just spewing bullshit after bullshit. His call about Eastern Europe bringing down Western Europe [which i also believed at the time, but changed my stance when i saw the rising bond prices, lower loan deterioration and growth in EE] is still unchanged even-though he has no empirical, or other, basis to claim that. Also he predicted the last 46 of 7 Euro collapses and 15 out of 4 current issues. He is not worth reading.

Sat, 05/15/2010 - 13:53 | 353720 JR
JR's picture

Cheeky, I agree in principle—and I’ve thought at times he sounds like Churchill against the Germans.  But I thought he had a point here.

 As far as Sarkozy and Merkel, I wrote this in reply #353623 today on ZH:

Because of Sarkozy’s dominant takeover as point man on the European bailout, he’s being thought of more and more as an economic insider, as more than a political insider.

It was French President Nicolas Sarkozy while president of the European Union who said on September 26, 2008: “We must rethink the financial system from scratch, as at Bretton Woods.”  And then he called for a new international monetary system--the ultimate grab by the international financiers for all the world’s finance marbles.  At Davos 2010, he called for creation of a World Environment Organization (WEO) as powerful as the World Trade Organization (WTO).

And because of this, more and more questions are arising as to Sarkozy’s roots.

Raanan Eliza in an article entitled "Sarkozy’s Jewish Roots" in The Australian Jewish News wrote on May 8, 2007 “Many expect Sarkozy’s presidency to bring a dramatic change not only in France’s domestic affairs, but also in the country’s foreign policy in the Middle-East.”

According to the article, Sarkozy’s mother was born to the Mallah family which is one of the oldest Jewish families of Salonika, Greece. Sarkozy’s position at the EU in 2008 is now held by Herman van Rompuy*.

All you need to know about Herman van Rompuy’s election as European Union President is contained in one of his first quotes as president:  “2009 is also the first year of global governance with the establishment of the G-20 in the middle of a financial crisis.”

Said Eliza: Sarkozy is a key factor in global economic coordination programs. Because of his position, he also was a key player in the Georgia-Russian dispute.

Raanan Eliaz is a former Director at the Israeli National Security Council and the Hudson Institute, Washington D.C.

*Van Rompuy officially is the first long term and full time President of the European Council.  (Until the Treaty of Lisbon, the position had rotated among the Prime Ministers of the Member States for six months each, since then they choose a President of their meetings for a 2 1/2 year period, renewable once.)

P.S. Thinking of you today: in terms of your health report, I hope all is well…  And, now, I'm away for the weekend... 

Sat, 05/15/2010 - 12:03 | 353620 Comrade de Chaos
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I don't think the FED will actively beyond IMF and visible but meaningless Statements and Commitments will contribute much into fighting deflation elsewhere. The reason is simple, they don't have resources and they know it. There are not extra tax generation that could cover those cost and they are at limit of their monetization. If they print more money,it will become more visible and they will spook the market and cause the inflation. And once FED will have to rise interest rates, we will be facing the stagnation which means GAME OVER for all of their (FED, TREASURY, Gov) futile attempts to control what can not be controlled - the complex system we call the economy.

Our administration, FED or treasury haven't said much about the EU bailouts, crisis for over two months because of the simple reason, they are already "ALL IN." The swap announcement and any action that follows will be immaterial and the face saving measures on the global fin arena, nothing more. 

In a way, EU blowing up or falling will give the US more leverage on the world scene, especially when the potential trade war with China is at stake. 

Sat, 05/15/2010 - 11:58 | 353615 Hephasteus
Hephasteus's picture

"Gold is topping and will soon come of 10%."

What a freakin liar.

Sat, 05/15/2010 - 07:11 | 353424 bob resurrected
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Hello you bastard. It is with great trepidation that I question what appears to me to be such a superb chess player. In other words, I don't want to piss you off or hurt your feelings! I have dollars and spend Euros. I was gifted an unplanned son by an Austrian woman a year ago. So, I am trying to time moving dollars, borrowing Euros, purchasing property, etc. Therefore, I have been hanging on your every word and that of Bruce, Leo,  and Orly too.

- I do not think the Fed will hide swaps. They say that they will give a weekly report. And, to your point on another post, the more swaps they report the weaker the dollar. Why hide it?

- In the spirit of cooperation, I think the Fed opened the swap lines to give the ECB the tool to protect the Euro if it wants. But I don’t think the ECB will want.

- To me, it is less of a race to the bottom and more of a controlled communal descent. Ben Bernanke told Congress that he was comfortable with a  $12 trillion balance sheet. Now that is a pray and delay strategy! And the ECB is now openly on board.

- I think it likely that emerging markets will increase consumption over a very long period of time and give the OECD a place to export, if the OECD picks up the productivity and innovation pace. And, this lends some hope for the pray and delay.

- It appears to me the Eurozone needs a weaker currency more than the US given that deflationary forces seem greater in Europe than in the US going forward.

- Brussels thinks they bought 2 years to figure out political/fiscal United States of Europe and the structural reforms necessary to do it and grow. They didn’t.

- The „market“ will force them to substitute a weak Euro and the competitiveness it brings in lieu of structural reform now, not in 2 years. But, governments will have their revenge when they reform banks into utilities. But not before another round or two of bonuses.

- IMO there will be rolling violent civil unrest as social contracts are broken by austerity and the formation of the NWO. Some possiblity that nation states will go to war as they try to stake out their position in that NWO. Terrorism and natural disasters will also prove conducive to a NWO.

- In the end, I think we are headed to a one world currency with that NWO. But first, a balance between OECD and BRIC, each with its own currency.

- The easiest next step to do that is to bring parity within the „markets“ for EURUSDGBP because it is an easier sell politically if the „markets“ have already achieved parity. Japan may simply be EURUSDGBPized. As the Euro has demonstrated, there must be political/fiscal unity to make it work.

- Therefore, I think I should borrow Euros to buy real assets as the deflation plays out and pay it back with dollars over time. Which I have done, but should have done more of, and should do more of even still. In addition, I have positioned all available cash in a dollar account in Austria to hopefully time the bottom.

 

Your move.

 

And, one more thing, don't stop posting if you are wrong. Gute Besserung.

Sat, 05/15/2010 - 17:39 | 353864 Noah Vail
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The EMU is dying because it was built on the faulty notion that joining multiple weak nations make a strong nation. Similarly, joining multiple weak and  debt crippled nations together throught the IMF in a new currency will solve the problem of extreme debt is no different than believing that more debt is the solution to too much debt.

 

None of such arrangements will work for anything more than a short time. If the Euroland can't make a common currency work, how the hell could anyone expect the whole world to? The notion of OWC seems like utter lunacy to me.

Sat, 05/15/2010 - 13:33 | 353703 outsider
outsider's picture

Having read a decent amount about the theory of the NWO and the global currency, I have gained a lot of respect for a lot of the arguements put forward to support it, as the important point for how a consortium of individuals with a common aim can gain and expand their power base,is that while power can be gained through violence or the threat thereof, to gain power with the consent of the populous requires managing the public perception though propoganda, fear of instability and collapse and manipulation of data to obscure the real picture and/or point the general public to beliefs consistant with what is required to futher the agenda.

While I personally am only interested in the broad strokes of what is happening at the moment so I can decide if I need to prepare for possible hard times ahead, I am not blind to the various manoverings behind the scenes and the possible meanings and ramifications of them. I tend to default to Occams razor when an event happens and try to understand how such an event could have been caused by chance or a normal conflance of circumstances until other evidence emerges, to simplify matters before trying to think of how an event could have been caused by, or spun to the advantage of those seeking power - it is unfortunate, but I too often see people claiming every little or big event as being caused by power hungry manipulators as soon as it happens, while not appreciating that it matters not if the event is planned or random, what matters is how the event is perceived by the general populous, so you should first look to how it is reported in the media to get an idea of what may really be happening.

Finance is not my strong point, I struggle with the technical part of it, but a large part of movements in the markets is down to the participants confidence or lack of in the system, and individual parts of it whether stocks, bonds etc, and perception of others ability to service their debt obligations.  And this is where psychology comes in so I do not discount the possibilty that various actors are using and controlling events to manipulate others to do their work for them, and that bringing the various currencies to parity would be logical first step to a common currency.

The thing that bothers me is this cannot just be a one horse race. Russia, China, the arab states, Isreal, Europe and many indivdual countries have their own desires and needs that conflict or interact with those of Anglo-American interests, and while a global currency may concord with their own wishes, I do not see them wishing the western powers having even more power over them that a common currency controlled by the west would have. So you have to start asking yourself what actions they may be undertaking, and I'm afraid that is where it all starts getting nedlessly complicated trying to peice together the moves and counter moves by the various powers and it can lead to a false picture due to information overload.

Europe itself is a mass of complications in itself, while all want stability, they are fragmented politically and culturealy in many different ways due to history, and while futher fragmentation may be in others interests, the economies are currently tied too closely together for them to allow their cohesion to break apart, no matter what bluster and brinkmanship is used in negotiations.   Whether in the end this pushes them to a position that would be advantageous to forming a global currency is hard to say, but either a collapse and seeking of stability or futher cooperation and building closer financial links could be used by the west to push their agenda, so really the only question is which way the winds are blowing.

Sun, 05/16/2010 - 11:24 | 354632 Canucklehead
Canucklehead's picture

Recommended occupation - Potter

Sat, 05/15/2010 - 07:29 | 353450 Cheeky Bastard
Cheeky Bastard's picture

First and foremost; i dont have feelings.

Also, this comment makes much more sense to me [as opposed to what i originally wrote in the comments], since i did not know FED will report on the swaps regularly. Strategically it is a good move since its tradable information and could [and probably will] create a market momentum in the FX. Actually; this is goddamn brilliant. Get all the gullible, ADHD FX-ers to help you push the EUR toward desired FX-rate by doing nothing more than publishing that you are engaged in swap agreements. Also, all the puffing and humming which will surely come from Grayson and Paul, does no more represent any danger since Paul's bill has been watered down and as such accepted by the Senate. The FED is now formally untouchable both in the eyes of the Law and commoners. The spin machine will do their thing to hide [as if it needs to, i mean with all the Hills re-runs and American Idol excitements] there are swap contracts in place. Im not so sure about emerging markets though; China has already burst [my opinion based on the most recent data analysis coming out from HFs who are short China], but of course the central government will not say that, India; meh.... never liked the way they based their growth on urbanization and not informatization or production [save Tata, Relliance [Ambani brothers] couple more]. The goal surely is OWC [NWO is already in place, what with all the military bases USA has lying all over the globe and underlying dollar pricing mechanism]. I still think that my strategy is the most likely to be implemented, and the UK will have to take one for the team [NWO=Anglo-American Empire [political center in W.DC, banking center in London]]. You are absolutely right in all of what you have written in your comments. 

Also, thank you for the good wishes; I am getting better. I hope you do well with your investments; but remember this if you dont; its not money that defines your worth.

Well, best wishes and i hope to read more of you since you, obviously, know what you talking about.

Sat, 05/15/2010 - 22:52 | 354236 AccreditedEYE
AccreditedEYE's picture

First and foremost; i dont have feelings.

LMAO!! F-ing awesome.

Sat, 05/15/2010 - 16:54 | 353821 The Mighty Monarch
The Mighty Monarch's picture

"I hope you do well with your investments; but remember this if you dont; its not money that defines your worth."

Which reminds me of this immortal quote from comedian Daniel Tosh:

"Money doesn't buy happiness. That phrase should end with 'just kidding'". It buys a Waverunner. Try to frown while riding a Waverunner. It's impossible. People smile as they hit the pier."

Sat, 05/15/2010 - 07:44 | 353457 bob resurrected
bob resurrected's picture

Vielen Dank für die Antwort und die Zeit, die Sie sich dafur genommen haben. Schöne Grüsse.

Sat, 05/15/2010 - 23:03 | 354244 jaybaybaker
jaybaybaker's picture

@bob resurrected

Lucky you, you are in Austria, "island of the blessed", If I have been translated this one correctly.

However, euro to parity when everybody and their grandmother is betting on it: I don't think so. If you want to get the max out of your dollars, exchange them quickly.

First, there is a good chance that we have the mother of all short squeezes in the euro sometime over the next two weeks. This will also contribute to stability since a good number of FX speculators will be taken out in stretchers.

Second, after the squeeze, we may test these lows or even lower again, but then the dollar will have some problems on its own (e.g. $4 trillion in rollover and new debt in the next 12 months; that's 30% of GDP for those who care).

Remember the death of the dollar in November 2009. All forgotten, like this euro crisis will be 6 months down the road.

Sat, 05/15/2010 - 16:30 | 353808 b_thunder
b_thunder's picture

cheeky and resurrected:  did the germans win the war? no.  so let's get back to posting in  english! 

 

Sun, 05/16/2010 - 07:26 | 354428 Cheeky Bastard
Cheeky Bastard's picture

I will write in Swahili if i wish to. Stop bitching about irrelevant things. 

Sun, 05/16/2010 - 12:47 | 354752 Bolweevil
Bolweevil's picture

No fu%^ing Elvish! You have been warned :)

Sun, 05/16/2010 - 07:20 | 354424 tip e. canoe
tip e. canoe's picture

b_thunder, does the world revolve around Anglo America?  the Anglo Americans like to think it does, but the sun does eventually set, even if it takes awhile to do it.  

try babelfish and enjoy the purdy colors.

Sat, 05/15/2010 - 18:07 | 353891 Gwaihir
Gwaihir's picture

Do Americans speak Vietnamese?

 

Sat, 05/15/2010 - 09:03 | 353504 Duuude
Duuude's picture

Twilight Zone again. Linked from Finviz but nada on ZH home...maybe my 'puter is dsxlycie.

 

Sat, 05/15/2010 - 12:11 | 353576 bob resurrected
bob resurrected's picture

shhhh. they are sleeping

Sat, 05/15/2010 - 13:40 | 353714 Duuude
Duuude's picture

Bclka teprelicohs.

Sat, 05/15/2010 - 15:15 | 353768 doomandbloom
doomandbloom's picture

does this mean Bernake is smarter than we give him credit for?

the one world currency is scary, not because of what its impact on my life, but because it would confirm what the conspiracy theorists have been predicting all along. 

Sat, 05/15/2010 - 05:41 | 353410 outsider
outsider's picture

First post. 
This is a great site, the group dynamic here is fantastic, even some of the trolls are funny (or at least end up being after the mob has had at them)

The situation in Europe is getting more and more interesting.  I must admit I thought that the bailout would calm the markets for a little while, until the underlying debt problems caused the thing to go down anyway.  I can only guess that those in the markets knew too much about the fragility in Europe, politically as well as finacially to capitulate straight away.  The fact that their own banks are having fun shorting the hell out of the euro hasn't helped :)

Or is it a case that the bailout hasn't really been put into action in full effect yet?  Do you think they will wait until the euro goes down enough, or the bond spreads in certain countries get worse?  Any sort of timescale for this happening?

This is off topic Cheeky, but you have posted a few charts from finviz.com on other stories, and would like a to ask a little about them if you have the time to answer.

I'm just an interested bystander seeing the train wreck who cannot stop myself from watching, so forgive my patchy knowledge, but I have a couple of questions I'd like to ask about these charts.  Thanks for bringing them to my attention Cheeky, even though I don't trade, being able to see how the trades are going out of market hours adds to my understanding of how things work.

First question, I'm a little confused about them being labelled futures charts.  Does this mean they are to do with futures contacts? And if so how do they collerate with the real prices? I do know that live feeds of stock or currency prices seem to match the ones on these charts, but do not know if I am mixing them up due to my ignorance.

Secondly, I was looking at the hourly JPY chart,

http://finviz.com/futures_charts.ashx?t=6J&p=h1

and noticed the large spike on the 6th May which starting from around 1.065 went up to a high of just under 1.14 before dropping to around 1.08. It also included an hourly spike from 1.09 to 1.138 ish before finishing at around 1.125.

Now to my untrained eye that seems a big spike, but I have no knowledge to put it into an historical context, so how rare is such an event, what amount of cash value can be determined for a spike that large, and what could have caused it?

I remember several people saying that this spike was before the "flash crash" in the US index's and could have been a cause or contributing factor, but have not so far heard any opinions on what caused the spike in JPY, so any info would be useful.

Sat, 05/15/2010 - 17:35 | 353862 knukles
knukles's picture


"Trichet echoes Merkl's call for a fiscally united Europe"

Ah, the Power Elite, ever expanding their hold upon the common man. Has it not dawned upon them that many today have concluded that they, our Venerable Respected Leaders are those who have caused such miasma?  It can be no one else, for they themselves are the policy and law givers. 

As a dog returns to its vomit, so to a fool returns to his folly.
-Proverbs, 26:11

 

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