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Three Questions for Mario “bumblebee” Draghi

Phoenix Capital Research's picture




 

 

Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.

Mr Draghi… a few questions for you…

 

You say that whatever measure you take… it will be “enough” to support the Euro. Seeing as you’ve already spent over €1 trillion via your LTRO 1 and LTRO 2 schemes only to find that:

 

  1. The uptick in EU banks shares lasted less with each new scheme
  2. The bond and credit markets punished those banks who sought funding via these vehicles

 

…my question is… what exactly is “enough”? Obviously €1 trillion wasn’t. Would €2 trillion be? What about €5 trillion? Seeing as banking deposits at the troubled PIIGS banks exceed €5 trillion alone, it seems even €5 trillion wouldn’t be enough to backstop the EU and get it out of this mess. So could you quantify “enough” please?

 

My second question would be… if you were to announce some “Hail Mary” policy of monetizing trillions of Euros worth of sovereign and banking debt, how would you stop the Euro from imploding?

 

You’ve no doubt observed the impact that QE 1 and QE 2 had on the US Dollar. How would you stop the Euro from collapsing if you were to announce an amount that would indeed be “enough” to contain the EU Crisis? As the below chart shows, the Euro is already on the ledge of a very big cliff.

 

 

My third and final question… thus far the ECB, when acting in concert with Germany and the IMF, has failed to contain the Greek crisis (there is now talk of Greece needing a third bailout)… how exactly do you intend to handle Spain or Italy (economies and banking systems many multiples larger than those of Greece)?

 

After all, if the ECB didn’t have “enough” to handle Greece, what makes you think you have “enough” to handle Spain or Italy? I note regarding this last point that Spain’s bonds are falling again despite a shotgun bailout of €100 billion just a few months ago.

 

If you actually have answers to these questions, I’m sure the world would love to hear them.

 

Graham Summers

 

Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.

 

 

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Wed, 08/29/2012 - 22:34 | 2748601 DeFeralCat
DeFeralCat's picture

The cats liked it. It is not new information but we liked the package. Formatted into three questions it simplifies the issue for the dogs and gerbils of our culture. They need to know to what the stakes are and where we stand. Four claws up!!

Wed, 08/29/2012 - 20:57 | 2748427 max2205
max2205's picture

GD! It's called swaps. Go back to school!

Wed, 08/29/2012 - 16:16 | 2747752 chart_gazer
chart_gazer's picture

Graham

1.) how much is "enough"?  whatever it takes. i'm not going to tell you a number because we will be sneaking, leaking, telling lies along the way to prop up markets. we are central bankers, we will know when we reach "enough"

2.)how would I stop the euro from imploding? I won't, i don't care. all fiat currencies are in a race to the bottom. in the mean time a weak euro will help exports for the euro zone.  don't get your panties in a heap worrying about the value of the euro.

3.)what makes me think we have enough to handle spain and italy?   trust me, there will be a global coordinated printing weekend soon that will be bigger than anything you ever imagined.  we know what to do.

Mr. Draghi

ps: A few questions for you...Do you realize you have been wrong about the euro for a long time? When are you going to recognize this? How much money do you think you have caused people who have followed your advice?

Wed, 08/29/2012 - 17:03 | 2747901 Zero Govt
Zero Govt's picture

Graham is not going to answer, in fact i'm not sure he isn't a bot

Graham doesn't actually care about this topic, he just uses the most dramatic situation of the day to flog his Subs' and promise you not only safety but but unheard of profits too (see King World News, Terd Fergusons et al, same game)

so we just use Grahams latest fishing expedition as an excuse to talk amongst ourselves around here ...beats trying to talk to a wall (ie. get a response from a bot)

 

Wed, 08/29/2012 - 23:19 | 2748678 FreedomCostsaBu...
FreedomCostsaBuck-o-Five's picture

Ha! "Graham" must be a bot.... For all the crap he gets for shamelessly flogging his paid subscription 'service' on this site he never answers on these comments. Going chicken-little over the news du jour can scare up a few subscriptions every time. You really have to ask the question - if the analysis is so shit-hot valuable, then why does he need subscribers? Just trade off the analysis and bank some filthy filthy coin. Case closed.

Me, I just religiously follow Jim 'getting back to even' Cramer for investing tips. Ha.

Wed, 08/29/2012 - 14:47 | 2747396 Fuh Querada
Fuh Querada's picture

A stunningly mediocre contribution.

Wed, 08/29/2012 - 18:40 | 2748153 JuicedGamma
JuicedGamma's picture

Actually, it was predictably pathetic.

Wed, 08/29/2012 - 14:33 | 2747352 surf0766
surf0766's picture

Send them volts. Volts for everyone Free volts.

Wed, 08/29/2012 - 17:42 | 2747849 Zero Govt
Zero Govt's picture

please don't ..Europeans are already subsidising the Toyota Pius, sorry Prius, and now the Volt too... anymore Govt propped up lemon products and Europes taxpayers are bust

Wed, 08/29/2012 - 14:27 | 2747329 Tango in the Blight
Tango in the Blight's picture

I bet Lloyd Squidfein can answer your questions.

Wed, 08/29/2012 - 17:06 | 2747837 Zero Govt
Zero Govt's picture

Lloyd Squidfein 'helped' Greece into this situation (a social and economic trainwreck)

...more roadkill in his rear view mrror rather than beds of roses ...is there any other 'result' from dealing with the squid?

Blankfeins promised 'bankers are productive' PR tour begins any minute now, grab the popcorn and a few sick bags, this presentation is going to be hard to swallow

Wed, 08/29/2012 - 14:07 | 2747229 digitlman
digitlman's picture

Nothing to see here.  Move along.

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