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Europe Buys Time with the Vaguest Plan Yet

Submitted by RickAckerman on 10/17/2011 08:37 -0400

So lame is Europe’s latest attempt at spin control that Americans could view it as comic relief from our own worries about the U.S. economy’s accelerating death spiral. Creating a global diversion was doubtless a goal of the exercise, which featured Sarkozy and Merkel, president and chancellor, respectively, of France and Germany, posing for the photo-op unveiling of a scheme – sorry, no details at this time – to put Greece and the rest of the PIIGS on sound financial footing. Never mind that France itself starts to look like a financial basket case if one scrutinizes their books too closely; or that the German people, if not yet their leaders, have lost their appetite for bailing out the rest of Europe. And never mind either that, rather than describing their supposed plan, Merkel and Sarkozy have merely promised to tell us more about it in the fullness of time – reportedly at a November meeting of Euroland’s potentates, wizards and feather merchants. To their dubious credit, and perhaps owing to an understandable desire to avoid the derision of the world, the two leaders did not refer to a “secret plan” when they deliberately left it under wraps; no, they alluded merely to “a plan, ” and we can only surmise that they were fearful of raising the public’s expectations by implying that something new or unexpected was about to be tried. Better instead to maintain and nurture the low-grade cynicism with which most of us have come to regard these announcements. That cynicism seems manageable, at least – presumably until market forces cause the whole shoddy edifice to crumble.

In the meantime, Sarkozy and Merkel have bought perhaps a month’s time for the hopeless illusion that political Europe will remain united under a single currency. Sustaining the endgame for yet a while longer was no small feat, considering that, these days, when pit traders around the world hang up their smocks on a Friday afternoon, it is with the fear that Monday will bring news of some epic financial disaster involving a Greek default, or perhaps even bigger problems at some huge, daisy-chained bank elsewhere on the Continent. The disaster we’ve all been expecting could happen at any time, really, but the banksters and politicians have wisely calculated that a run on The System can be postponed more or less indefinitely as long as supposed remedies publicized at carefully timed intervals are left intentionally vague. The Merkel-Sarkozy press conference was the vaguest such media event so far, a dog-and-pony show that lacked both a dog and a pony. It was brazen of them to assume that merely talking the talk would gain another months’ reprieve for Europe; however, with stock markets strongly on the rise since, it looks like they’ll accomplish their goal.

Rube Goldberg to the Rescue!

Not that any of us expects much more than a financial Rube Goldberg contraption, if even that, come November. Indeed, no one could possibly believe at this point that the Merkel-Sarkozy plan will have any more effect on the unfolding cataclysm than all of the other schemes that have been tried so far. Still, the mainstream narrative that a political solution can restore Europe’s financial integrity will continue to obtain, thanks in large part to the news media’s faithful and unquestioning complicity in spinning the story. While we should all like to believe that it is habitual laziness and ignorance that have prevented the Fourth Estate from being more forthcoming about the true condition of the global financial system, it is in fact wide-eyed, scalp-crawling fear that has caused news editors and op-ed writers to shrink from the truth. They are in it too deep by now to forsake the pretense that the central banks, working in concert with our benighted political leaders, will somehow stabilize the financial system.

Nor are they likely to accomplish anything of lasting value with the latest proposed superfund, which, at two trillion euros, would dwarf the $600 billion-euro figure currently on ostentatious display. These outlandish numbers are meant to challenge the subversive designs of speculators who would bet against Europe, the euro and, most immediately, Spain and Italy. Instead, they merely encourage cynicism, which is summed up succinctly in the question, “…and where, exactly, would those two trillion euros be coming from?” Do the spinmeisters who pull these numbers out of thin air actually believe we are so stupid as to believe the money is real?

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Mon, 10/17/2011 - 15:15 | 1782459 Grand Supercycle

SP500 daily chart now gives bearish signal, warning of a new leg down. Weekly chart reverts to neutral.

http://stockmarket618.wordpress.com

Mon, 10/17/2011 - 14:41 | 1782318 Joebloinvestor

This relationship will implode when Merkel finally realizes she has been the dupe of the decade.

The French are in just as much (if not more) financial trouble because of their giveaways and social programs while they ignore the immigration problem.

They are just better liars.

Mon, 10/17/2011 - 12:01 | 1781693 walküre

Germany's Schäuble confirmed today what I suspected all along. There will not be a transfer payment of German's taxpayer money into Greece.

Vagueology and rumor mills galore, won't change the fact that at the end of the day nobody will authorize the payment. It's political suicide or maybe worse.

Mon, 10/17/2011 - 11:29 | 1781529 ZeroPoint

I guess the plan is limp along and hopefully the US defaults first? Won't happen.

It's really frustrating watching Greece magically make its coupon payment every month when it should have defaulted 3 months ago.

Mon, 10/17/2011 - 11:51 | 1781642 Ghordius

"the plan is limp along and hopefully the US defaults first?"

you are thinking national

the plan is to limp along and hopefully the TBTF banks will crash on something else

but who knows? the horse might learn to sing...

Mon, 10/17/2011 - 11:30 | 1781521 Kina

Well they tried horse shit, dog shit, bull shit and frog shit. Now they have graduated to vagueology which will later include numerology and astrology.

Sarcozy will start to read out the stars to prove all is well. Libra: "Today will be a new begining, old problems will be sorted. Working with older women and used condoms will lead to recapitalisation of European banks. Lucky number : 7"

Mon, 10/17/2011 - 10:54 | 1781319 sangell

Merkel and Sarkosy maybe forgiven for their vague comments as they are not experts in finance and banking but what are we to make of the grotesque remarks coming from the French bankers Trichet and Christian Noyer. Noyer 'our banks are solid' but ' they must raise their capital levels' yet 'French government help is not needed' because 'they can raise the money privately'. Oh sure! Then there is Trichet who says the ECB is not going to buy distressed sovereign debt even as he is buying it!

Mon, 10/17/2011 - 10:33 | 1781216 PulauHantu29

"I'll gladly pay you Tuesday for a Hamburger today."

It's nicknamed the "Wimpy Plan."

Mon, 10/17/2011 - 11:55 | 1781673 IAmNotMark

Except the plan is now:

I'll gladly borrow more from you to pay you sometime for the loan you gave me Monday to pay off the loan from Sunday that paid the loan from Friday for the Hamburger I ate five years ago today.

Mon, 10/17/2011 - 10:18 | 1781153 buzlightening

Thx for restraint in the Berlusconi comment of merkel. Yep I hurled over the picture. Babe in paris!

Mon, 10/17/2011 - 10:07 | 1781102 AbelCatalyst

As in life, at some point actual action will need to be taken, at which point the perception of $2T will bump headlong into reality... The misguided manipulations will only undermine credibility, which they will need when the real crisis comes to the surface. They are using up their goodwill now, when it will be needed far more in the near future. The lack of credibiltiy will only make things worse when the SHTF... I'm just sayin...

Mon, 10/17/2011 - 10:04 | 1781091 Chappy