Smashing The Can Instead Of Kicking It Down The Road

Wolf Richter's picture

Wolf Richter

“No, absolutely not,” said European Central Bank President Mario Draghi when asked if the euro was in danger. “The euro is irreversible,” he added just as a whiff of panic began sweeping over the Eurozone. Everybody was supposed to enjoy their long vacation, and nothing important was supposed to happen. But, like a group of disruptive homeless guys, the ECB, the International Monetary Fund, and politicians have apparently gotten tired of kicking the Greek bailout can down the road, and they stomped on it instead.

Last week it was the ECB; it announced that it would no longer accept Greek government bonds as collateral, thus cutting Greek banks off from ECB funding. They will now be dependent on Emergency Liquidity Assistance (ELA) by the Bank of Greece, an unsustainable, risky measure.

Over the weekend, word seeped out that the IMF, having lost patience with Greece’s stalled reform efforts, would be unwilling to contribute more funds to the bailout. A huge blow. Vigorous denial by the IMF? Nope. On Monday, it only said tepidly that it would be “supporting Greece in overcoming its economic difficulties.”

Inspectors of the Troika—the EU, the ECB, and the IMF—are trundling into Athens today for meetings and inspections starting on Tuesday. Their final report will be the basis for the Troika’s decision in September to make the next bailout payment, or to let go. Politicians appear to be holding off on their final judgment until then. But they’re talking—and it doesn’t look good for Greece. Its demands to renegotiate the agreed-upon reform measures and then to delay their implementation has hit a wall of resistance.

“We won’t agree to any substantive change of the agreements we made,” said German Foreign Minister Guido Westerwelle. Economics Minister Philipp Rösler was “more than skeptical” that Greece could work out its problems. But any decision would have to wait for the final Troika report. “If Greece cannot meet the stipulations, then there won’t be any more payments,” he said. Greece would have to default, which might encourage it to leave the Eurozone. But no big deal: “Greece’s exit has long ago lost its scariness,” he said.

Giorgos Papakonstantinou, Greek Finance Minister from October 2009 until he was replaced by Evangelos Venizelos in June 2011, doubted the abilities of the Greek government to deal with the challenges and was “not optimistic“ that it could remain in power much longer.

Even the Big Kahuna, who is on vacation, and who’d pushed for these serial bailouts though they put deep rifts into her coalition government, lost patience with Greece. It leaked out that Chancellor Angela Merkel considered it “unthinkable” for her to beg the Bundestag for a third bailout package. And a third bailout package would be required if Greece’s demands for watering down the reforms and for delaying their implementation were met—they’d raise the costs by an additional €30 to €50 billion.

The next opportunity for Greece to default is August 20, when it has to pay the ECB €3.8 billion, which it doesn’t have. As Greece’s debt is now mostly held by public institutions, including the ECB, a default would cost taxpayers outside Greece dearly. Requests for emergency funding have fallen on deaf ears. So Greece could try to sell three- or six-month bills at astronomical rates, but most likely, the ECB will find a way to keep it afloat until a political decision has been made in September.

With Spain under fire, and with Italy—and thus the Eurozone as a whole—at risk, the perception is growing that the Eurozone might be stronger if it scuttled its leakiest ship. The surprise factor has long been wrung out of the system. Markets are ready. After a bit of chaos, there might even be relief. And that perception, if it gains the upper hand, will seal Greece’s fate.

Now the strategy is to prevent contagion. The temporary EFSF bailout fund is too small. What is needed is the larger firewall that the “permanent” ESM bailout fund will provide, once operational. Hence the enormous pressure on the German Constitutional Court to wrap up its review of the ESM and nod it through by September 12 [read.... Euro Desperation: German Justices already Buckled under Political Pressure].

By getting the Greek default over with, politicians and the Troika could focus on bailing out Spain. Unlike Greece, Spain is critical to the survival of the euro—and after Spain there is Italy, whose debt is huge, and even the ESM won’t be able to bail it out. All that remains is hope that contagion somehow stops before it gets to Italy. Hope, or a treaty change that would allow the ECB to buy sovereign bonds on a massive scale and bail out banks directly. The whole debt crisis would be over. To be replaced by a crisis of a different and more pernicious sort. Unlikely that the “northern” Eurozone countries would go for that.

But, but, but.... There are opportunities in Europe: mining. Europeans have a long history of it, yet dealing with regulations and eco-friendly groups has driven countries to switch to importing resources. Now record joblessness has refocused political agendas because mines can employ a lot of people! For investors, that’s exciting news. Read... Profiting from Europe’s New Gold Rush.

And here is yours truly in a conversation with Max Keiser on the Keiser Report, discussing bubbles, central banks, the Eurozone, NIRP, and “stupidity arbitrage” (video, aired over the weekend).

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smiler03's picture

Has anybody else spotted the serial downvoter? Not just in this thread but others too. Every post has at least a minus 1.


Conax's picture

Maybe it's this guy- a 58 year old investment banker that thinks he's Earnest T Bass-

Snakeeyes's picture

Of course they can't save it. Look at the data! If it wasn't for Germany, the whole Socialst stew would blow up.

tricky rick's picture

Otis the drunk bailing out Donald Trump.  never happen ONLY the US has the credit ability (reserve dollar) to bail Europe out.




bugs_'s picture

Hulk for Fed Chair.

brings new meaning to greenbacks


lets go green at the Fed

falak pema's picture

One thing interesting came up when I looked at the videos on the Keiser report in general :

He mentions in this video on a panel Q& A session that Deutsch Bank and BNP act like HFs in Greece and Spain and are part of the speculation fleecing the peripherals.

This is NEWS to me; that the Euro banks ALSO fleece the peripherals drowning in bad debt. If this is true the madness is also attacking the EUrozone banks, not just the Anglo banks out of London.

That is an awesome tombstone to put on the fate of Greece and Spain and the others :

Here lie the bodies of Euro sovereings and their banks fleeced by the Germans and the French in their mad play to escape the fate of southern european nation states! 

Any views on that? Is this a fact?

In this crazy game I guess all these clowns can go dipping their dirty fingers in the honey pot! 

Panafrican Funktron Robot's picture

Deutsch Bank is part of the "gang of 6" that controls the LIBOR rate of every single major currency.  I am completely unable to muster a surprise face that they are making money on the demise of.... oh, I don't know, fucking everything.

AnAnonymous's picture

The Germans are behind the scenes, you'll find many biological Germans involved in the 'manipulation' of LIBOR rate.

Winston of Oceania's picture

Abandon this unholy union...

eddiebe's picture

The banksters will get paid. My guess is they want the gold of not just Greece, but of Spain and Italy too. Then after they have their gold, they'll go after France..... Don't expect this to become information available to the public, though. The money printing must go on.

Chief KnocAHoma's picture

“The euro is irreversible,” he added just as a whiff of panic began sweeping over the Eurozone.

Guess what... so is herpes.

janus's picture

Wazzup, Wolf?

yup, agree with everything...i'll only add that janus would be placin a massive short on french bonds; action to really start around september, but timing is a bitch.  still, i cannot see french 10Y staying below 4 after november -- and possibly much worse.  janus tries to be certain when he predicts; and this seems pretty certain.  there again, i have been wrong before.

anyway, i read the first two chapters of your book.  i think you're a hip-cat.  janus intends to learn the craft of deep-water sailing...i'll go further and say that i intend to someday live on a boat.  don't know for how long; and it's not some doom's day escape -- i just want adventure.

from which i can expand on the idea i just mentioned...the notion of 'adventure'.  life is boring without adventrue.  in our ceaseless pursuit to smooth all edges and soften all blows, we've obscured the fact that life should be about discovery, adventure, enterprise, exploration, acquisitive-agility, dice-tossing bravado and stiff-upper-lipping it.  where did we go wrong?  again, i submit it has something to do with the blue-haired-menopausal trajectory upon which we are sliding...and it's a downward slope; it's safe, and soft, and sanguine...and ever so boring.  really, brothers, we've submitted to a dictatorship of the timid and infirmed.  they've seized the scepter.  

even so, they have frail and diminutive hands.  nothing to it, really,  just stroll right up and take it.  if i told you how easy it was they'd arrest me.  no, really, this whole system is simply a web of that things won't get too out of hand in one spot before adjustments can be made.  this system was designed before the intenet. long before i-phones and whatnot.  this antique system that feels so safe; it is in serious peril.  it cannot catch up and it knows it.

it is therefore in this spirit...le esprit de liberte, egalite, fraternite...that i make you a solemn vow.  

and i swear thusly:

if i ever have power to (or have been vested with the power to so actuate such power), smack the shit outta some bitchez that deserve it, i will indeed therefore grant unto myself such office and station as is fitting for the smacking of bitchez that's got it coming.  and, bitchez, i gots a vicious open-handed smack.

in fact, i'm detecting a genuine lack of good ole fashion open-handed smackin in our modern world.  used to be, you'd see a good, solid smack every now and a days, even for the avid smack-observer, there's nary a smack to be seen.  it's a veritable sahara of smackin out there.  time to bring back the smack, sez janus:

you tube is awesome.  anyway, i'm gettin distracted.  do you bitchez remember when i said something about getting a job working alongside a 20 year old pre-med student who has a desperate crush on janus?  and perhaps you remember that it was the manager of said place that told me about said crush...and that i wasn't sure of the 20 year old's shade of blond?  well, janus is now certain along two fronts:

the first being the shade of blonde:  strawberry.

the second being the manager:  a bitch that should someday be sentenced to a very severe open-handed smack.

now, i'm gonna tell this story with the expectation that you, the reader, reserve judgement.  better yet, i think, from the very outset, you should be sympathetic to my position in the matter.  in short, you should bias yourself to janus...because he is the offended party here.

okay, so the whole thing started with a cab ride...innocent enough, the unbiased observer may think to himself. but then it got weird.

so it was like a twenty minute cab ride; and this was the first time i'd met the manager of this place to which i would someday apply.  she was with her husband, and it was some sort of corporate dinner -- one at which casual drinking was frowned upon.  and so it was, they were both loaded.  the conversation on the cab ride home was stilted at times but genial by-the-by.  nothing unusual, really.  that was until we arrived at their address.

we all sit there silently after i announce the total:

'that'll be 22.00.'

(like i said, long silence)

wife/manager: 'go inside, mario.'

husband(mario): 'what, are you gonna fuck him?'

wife: 'i dunno?'

janus: 'no, mario, she is not going to fuck janus.'


so this lil episode resolves itself the best way it knows how.  truth be known, this is not my first such offer...lotsa freaks out there that want to watch you fuck their wives.  i know what you're thinkin...but people are strange:

long story short, janus didn't fuck her or let her suck his cock...just got paid and left....wish'd em God's speed.  okay, sez janus to his self, 'that's that...nothin can sprout from that sordid seed.'  janus was naive.

okay, so, a few weeks later i pick up the lil 20 year old pre-med student and lay the ole charm on all thick-like...twice.  little do i realize that this lil girl is gigglin and whatnot over janus to the manager that wanted janus to fuck her while her husband watched.  alright, just so you're not confused, ZHealots, there's a 20 year-old very fuckable & potential concubine and a gross manager that represents no promise between the sheets.  on our third cab ride, the 20 year old informs me that she knows the gross manager...and so janus makes the huge mistake of confiding the sultry details of his interaction with the gross manager with the 20 year old pre med student.

clear enough so far?  good, it gets more complex; so pay attention:

(lil music's a long story): (okay, that was tacky...but, all the same, if you saw her, you'd lust -- i promise) (how sweet)

let's skip ahead, shall we?

so the 20 year old pre-med student encourages me to apply for a position that had recently come open.  'great!' thinks janus; as it pays a crazy sum for what you do...also, i'm all chill; insofaras i've never interviewed without receiving an offer.  the streak is at an end.

i go through three interviews and come through just drippin with flying colors.  smoked em' all.  got an oral offer...and then, i was called in as a special request to take the gross manager home in the cab.

it was tense.

'you never told me you were married.'  sez the gross bitch, all indignant-like.

'well, it never came up.' janus dryly replies.

'i was gonna set you up with xxxxxxx; and you have a wife and kids!' she snorts.

we belabor this lil tete-a-tete for the duration of the cab ride; at the end of which she announces that it's gonna be a while before she knows whether or not i have the job.  three weeks later, she has some assistant call to tell me i didn't get the job.

the thing that really offends me is the fact that i'm certain (and i am in possession of definite information to verify this) that this lil 20 year old pre-med student narced me out.  yes, don't gasp...i do suspect her of double dealing.  can't be, you say?  no way a cute girl could janus betray?  seems so, brothers...seems sadly could she tell that gross bitch that she knew that janus was asked to fuck her in front of her husband?  how could she?

telling teller tell:

furthermore, how dare this lil 20 year old pre-med get upset at discovering janus has a wife and children...janus would have explained; in due time...all in due time.  listen, bitchez: all information will be given on a need-to-know basis.  

so, as you can all see, janus is faultless in the whole affair.  and the irony of it is: janus fucked no one and got fucked by everyone...crazy, no?

time to restore order and balance to this ole world:


well i'm sorry but i'm not interested in gold mines, oil wells, shipping or real estate/

what would i like to have been?/

everything you hate/

...there is a man/

a certain man/

and for the poor you may be sure/

that he'll do all he can/

...who likes to smoke/

enjoys a joke/

and wouldn't get a bit upset/

if he were really broke/

with wealth and fame/

he's still the same/

i'll bet you 5 you're not alive/

if you don't know his name,




falak pema's picture

let me ask you a question :

Would PG Wodehouse have loved your story?

janus's picture

hard to say with that one...i tried to abbreviate it a bit too much -- too many details to condense into a reasonable space. i was nearing the end of a 12 pack. and i think he may shudder over the leitmotif; insofar as he always kept it clean.

all that being said, i reckon freddie wigdon would've found himself in just such a jam.

shit happens,


falak pema's picture

Mutti Merkel seems to have grown a pair of balls.

She is Bismarck's daughter if she decides to pull the plug on Euro peripherals. Its the end of Euro and contagion is on bigtime as private financial debt is the gorilla in the system and it goes back all the way to USA. 

This is the tough call that was hers. If she makes this all the way inspite of Draghi squid oligarchy play, it means the US banking system will melt down as well. And Pax Americana reserve will then have to show its real metal.

Her call is the tipping moment we've all been waiting for. 

What does Bernanke do, does he QE-3 to save the system for contagion implosion?

Sterile can kicking if Merkel has crushed the can in Euro zone. 

As for Euro zone it will mean the peripherals leave the currency; its every man for himself and the acrimony amongst burning banks and supportive governments, amongst themselves as counterparties, will be ominous. We will be in 1930 times and fascist chimes rising in Eastern Europe and peripherals. When thieves fall out on both sides of the pond...

Heil the new reich of Mutti Merkel. She will have a fire to control in her banking system. But that fire will be smaller than elsewhere; and the world will be in unchartered waters so who cares! 

Advienne ce qu'il adviendra! 

PS : As the Shadoks used to say; if there is no solution there is no problem !

PPS : Here is the Squid "market's" reaction to Mutti power play : a Moody's write down of Germany's rating! Risk on big time!

Moody's cueille la zone euro à froid et met Berlin dans l'embarras

Terminus C's picture

"Pax Americana reserve will then have to show its real metal."



The whole world wil get to see this metal.

dcb's picture

"the subprime crisis is contained" the bernank

Whenever they say this, bet the opposite if you want to make money. the only thing thyey are doing is making sure the bankers can sell above you and make a profite when you are sick of listening to their lies. classic central banker playbook. besides we know he's a goldman guy so telling absolute lies isn't an issue for him.

TPTB_r_TBTF's picture

This is just one big  

Global Poker Series:


  • The IMF and the ECB are bluffing.
  • Greece will call.
  • Sometime on/before Aug. 20th the cards will be shown.
  • TPTB will collect their chips.
  • New hands will be dealt.
  • Rinse.
  • Repeat.

Aug. 21st will come and go.

yawn...   :-O



"New hands will be dealt" by TPTB.  They are the Dealer.

edit2:  They stacked the deck.

Chief KnocAHoma's picture

Fucking crooked dealers! Don't play in this game... they'll cheat ya. Fold and buy metals.

vainamoinen's picture

bank guy in Brussels - thanks for the links!


dunce's picture

Why would any one think Merkel would commit political hari kari so greeks could fool around a few more months. I think they all wish obama was gone next week so the world had a leader again. Merkel is not up to leading the world but is doing pretty good for her country and the eurozone. obama can not find a leadership ability or his ass with both hands and a flashlight.

TPTB_r_TBTF's picture

I may be reading something into your post:

I seem to find [your] desire for "World Leadership" (?). 


TPTB always have some "leaders in waiting".  They train these kids from an early age just for this task. 

If you Sheeple want "leadership" ... all you need to do is ask...


Chief KnocAHoma's picture

Don't go nutts! His point is that the US economy is still the biggest engine in the room and all we need is someone that understands how to insert key - turn - and start - voila!

Instead we have a simpleton who thinks he is a genius. Not only does he not know where the keys are, he is trying to dismantle the engine and rebuild it with solar power cells or fucking algea combuster shit conveters because he alone "knows the right way to do this". In reality, he couldn't find his butt if it had a bell on it, and he would over analyze why said bell was ringing in the first place.

"That bell ringing is Bush's fault, or the 1%." 

Look, it ain't that hard. You want jobs, a solid economy, peace and prosperity... then find someone who knows where the keys are and start that freaking engine!

Uncle Remus's picture

That engine got boxed up shipped to China. The US economy needs a de-centralized industrial swarm of local industrial economies based on local capital. We need to kill the mega-corps dead, starve the TBTF blood-suckers, completely undermine the easy-credit zombie consumer mentality and last but not least, render government moot.


A revolution in thought and mind-set is needed here, but I am not opposed to taking out the trash if needed.

Meremortal's picture

Uncle Remus, that engine is sitting right under the ground in the USA. We have more oil than Saudi Arabia and Iraq combined, and more cheap nat gas than we get to in decades.

We just need a president who will issue some permits and hundreds of thousands of good paying jobs will appear every month. And the consumers worldwide will benefit.

(Except for those in OPEC countries.)

And in a major win-win, co2 emissions are dropping like a rock due to fracking for nat gas.

AnAnonymous's picture

So, in other words, the US citizen solution to centralization of production is recentralize the production in the US over decentralization on the world?

How wonderful.

US citizenism at work.

Mitzibitzi's picture

Yup. A return to the use of 'out to the horizon' economies. If you can see it from your window, you fully engage with it. Anything further away is of secondary importance. Support your local butcher, baker and candlestick maker and the wealth generated in your area will mostly be spent in your area, to the enrichment of all.

Chief KnocAHoma's picture

No argument here... all that will start that engine again. The biggest baddest mofo in the World!

q99x2's picture

Some good writing.

If Greece gets to keep its gold. Fuck-head Draghi can borrow the money for the Spain bailout from Greece next year. Assuming Greece leaves the Euro and the EU NWO globalist bankster trap Mf'ers.

andrewp111's picture

Then Ze Germans must send in special forces to seize the gold immediately after the Greeks default and exit the Euro.

Ghordius's picture

"If Greece gets to keep its gold. ... the EU NWO globalist bankster trap Mf'ers."


1. Greece has nearly no gold. negligible

2. EU NWO? hello? are the big five megabanks in the EU? only as much as they have their hyperhypothecating branches in the City of London, which is not a "friend of the EU", in fact it's the most sabotaging element in europe, constantly demanding idiotic political changes for financial reasons, including a break-up of the eurozone or a full fiscal union, two extremes that show where their bread is buttered. No, the "NWO forces" are in NY and the City of London. The EU is just a good target for propaganda.

3. Ze Germans are not going to send special forces anywhere. In fact, if they would, they would get their gold back. From the NY-FED's basement, where it's sitting next to France's shiny.

Mitzibitzi's picture

Yeah, right! Like there's any gold in that vault! Gold plated tungsten, maybe.

All the real bullion disappeared off the grid a long time ago. You don't think our glorious overlords would leave it where the plebs could conceivably get their hands on it during a period of 'civil unrest', do ya? That shiny has been spirited off to secret, unregistered vaults, probably not even IN the US, years ago.

pashley1411's picture

With Greece, I keep thinking Estonia.    The weakest statelet was all it took to burst the dam.

How can anyone think contagion will stop short of the Rhine?

AurorusBorealus's picture

The best opportunities in Europe are in the European defense industries.  War wiil make all the economic and financial problems seem small... and allow powerful people to remain in power.

TahoeBilly2012's picture

Wolf's "smashed can" story is incredibly bullish. I wonder if we will have Internet next week...

Peter Pan's picture

"the Euro is irreversible".

I agree. It is out of control and is heading for the abyss.

This is nothing more than the sheer arrogance of certain men who are willing to destroy human beings, nations and civilization rather than admit that their Euro turned out to be a pathetically prepared and administered piece of financial and political architecture.

Coldfire's picture

More like a pathetically prepared and administered piece of s***.

falak pema's picture

smells awefully like a greenback; but with a more modest whiff of brown gold.

TahoeBilly2012's picture

Wolf when did you write this last summer? I am packing my bug out kit now and my 50 lb sacks of rice are arriving tomorrow. What the hell are you smoking bro?

silverdragon's picture

Greece, just walk away from the debt.

cranky-old-geezer's picture



Yes, Greece is the smartest bunch over there, borrowing wealth from all the other EU nations, never intending to pay it back, just walking away from it when they can't borrow anymore.

Draghi is scared shitless.  He knows Greece will just walk away and it'll bring down the whole EU ponzi scheme when Spain walks away, Italy walks away, everybody walks away when they can't borrow anymore.

TPTB_r_TBTF's picture

No modern country was ever planning to pay down its debt.  Add Germany to your list.  The Germans also do not plan to pay their debts!

The Plan is:  permanent, perpetual economic growth allowing all/any govt to roll their debt over, and over, and over.

It was never any nation's intention to pay down any debt!

Greece, Spain, Italy, Others are just having some problems rolling their debt over.  Germany is usually able to roll their debt over ... and when they cannot ... then Tyler informs me.

AnAnonymous's picture

No, no, no...

It is indeed in the plan of US citizen nations not to repay their debts.

For other countries, US citizens have had the way to collect and repo on the debt issued there.

For these countries, debt is not an enriching tool as for US citizen nations. It is a draining tool, sucking every blood drop they have.

There is defaulting (which US citizen nations have been doing for decades now) and repoing (which US citizen nations have inflicted on some other nations for decades now) when it comes to debt problems.

TPTB_r_TBTF's picture

please elaborate on:

There is defaulting (which US citizen nations have been doing for decades now)

Please give me more infos about these "defaults".

Mitzibitzi's picture

Yup, they've even been talking relatively openly about it on the BBC - ok, it was pretty late at night on a weekend, but there was a pretty frank admission from a couple of economics professors, a City guy and some politics correspondent that the debts of most Eurozone countries, the US, UK and Japan were never going to be repaid. There's simply no way to do it, even if the Govts involved could get away with asset stripping their entire populations, was the basic consensus.

Peter Pan's picture

Two and a half years ago the gutless Greek politicians could have defaulted and led the way not just for Greece but also every other debt infested nation in Europe. They failed to do so because for decades they had been bribed and compromised and were worried about what would happen to the Euros in their swiss bank accounts and offshore companies.

A last stand must be made for capitalism, democracy and decency. After that, the Gulags of Russia will be coming to a place near us.

Possible Impact's picture

“The euro is irreversible"

Orue? (said with strong rising inflection)


falak pema's picture

what draghi means is : we are making Merkel an offer she can't refuse, the old witch. He is obviously speaking in the name of his overlords to a euro baron who is stepping out of line.

Let's see if she has Bismarck's handle bars hidden in her panties.