Plan for a Plan Needed in Europe by 12/9

South of Wall Street's picture

This quote from CNBC's website struck me as hilarious (in an end of the world sort of way).

Germany and France are exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries, aware that getting broad backing for the necessary treaty changes may not be possible, EU officials say.

The 12/9 Summit is the latest "solution date".  As though anyone thought a credible solution was in the works at this point, it is becoming clear that the Eurocrats have no idea what they are going to do. As this saga continues its important to note that modifying treaties, instituting absurd austerity plans, and leaking rumors of Chinese assistance only buys time. 

Sovereign yields and botched auctions indicate that stress in credit is only building (Note: implosion is approaching).    Markets could give Richard Koo's Euro QE or some other coordinated program the benefit of the doubt as being credible.  The only problem?  Germany doesn't have any interest. As we've progressed from Greece to Ireland to Portugal to Italy to Spain to France, Germany is going to hit the eject button before attempting to pull out of this nose dive.

Merkel Rejects Euro Bonds from Bloomberg

Euro bonds are “not needed and not appropriate,” Merkel ..... She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.”


More work needs to be done?  On what?  Germany clearly has no interest in co-signing a loan for their fiscally inept neighbors, and looks as if they are focusing on saving themselves while participating in all the conference/summit song and dance. 

The impact on financial institutions is clearly going reverberate globally (seen BAC trading lately?), but its about time the markets solve this situation by forcing the inevitable 'licks' to be taken. Haircuts, right downs, capital raises, defaults.  These countries are going to start fending for themselves.  That is the 'answer' and it is becoming clear.

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Canucklehead's picture

Any thoughts on what a CDS "holiday" would do to the markets?  Basically there was a "partial CDS holiday" with the Greek Experience.

I've been thinking that in today's world, there may well be a CDS holiday. Which legal system would you use to claim your unregulated CDS gains?  Poilitically, would CDS be treated like the tobacco industry or the drug industry?  How long would it take to clean up the mess?

When the euro blows up, there goes that neighbourhood.  Very likely counterparties have gone all in ala MFGlobal.  A CDS holiday complete with a court sanctioned politically connected cleanup could well mean that many of the european banks could be bought for $2/share.  The end result is consolidation of the european banking system in stronger American/German/British hands.

Weisbrot's picture




Shrink Government (no more cushy no show, do nothing, and do little jobs)

Reduce Government Stipends

* Reduce Salaries for Bureaucrats

Reduce foreign aid

Route out internal Governmental corruption

Route out benefits fraud

Cap Government Salary & Benefits for the next 12-15 years at the current rates

Spend Less You Corrupt Selfish Dumbfocks !


jeff montanye's picture

that's going to happen.  and before the next italian auction (tuesday).  

not that it's not good advice.  also stop the endless wars, the war on drugs and the endless support of this particularly persecuting form of zionism, while we're at it.

Kina's picture

Extreme movements in currencies and markets. A very sick dog is this.

Does TPTB think if they goose European markets up 4-5% in a day that we will all be impressed, or just make it even more obvious how desperate and corrupt they are.

zilverreiger's picture

quit blaming germany for not playing along with the banksters the war comparisons have no merit.

Start blaming USA Wallstreet and City of london.

El Oregonian's picture

Italy, better be looking up intently into the skies because thee 'Ol Red Baron(ness) will be nose-diving and strafing all the way down with you in her sights...

swani's picture

They are going to keep the Ponzi going until they simply can't keep it going any longer and that means they are going to do whatever it takes, whatever, coming up with Galaxy Bonds from outerspace if they have to. Merkel has said "no Eurobonds", but she has also said that the Euro "will remain". It's not in Germany's best interests to leave the Euro, a strong Deutch Mark will hurt German exports. Unfortunately, I think we have a ways to go before we see this cookie crumble. They are just pushing the situation off the edge of the cliff, a la Lehman's, to get the most squid friendly outcome; more printing, austerity and taxation with an inflationary cherry on top. Yum.    

mjk0259's picture

Europe's been around for a couple thousand years and had much worse problems. They don't need to do anything by 12/9 except drink and get laid.

gangland's picture

5th gen sure about that champ? Afpak-iran/iraq been around since alexander or prior and look at them now...jussayin...


"Europe's been around for a couple thousand years and had much worse problems"

what would've happend during the 100yrs war, the 30yrs war or with the calvinist wars if europe had nukes?

Georgesblog's picture

With the recent collusive behavior of Germany and France, it's more like the latest possible ultimatum date. Everybody else looks like they're being dragged to the edge.

apberusdisvet's picture

Time for Merkel to have an unfortunate "accident"; the Rothschild Corporation always gets its man (er...woman).

philipat's picture

Probably a bad traffic accident involving Ron Paul in other vehicle?

philipat's picture

Germany is quite correct about the moral hazard of Eurobonds and ongoing bailouts but it must, of course, in the final analysis, be prepared to pull out of the Euro and either allow its Banks to fail (The correct solution) or be re-capitalised. The German people are not going to approve any of the other "Solutions". And why should they? They didn't create the problems in the periphery.

Rome is burining's picture

Deutsche bank is levered 49-1. They will have to bail out their 5 biggest banks to the tune of probably A hundred billion plus plus of euros, if not a lot more. It will be interesting to see it play out in any event. Get a big hedge with no counter party risk.

Buck Johnson's picture

Thats still cheap compared to what it could cost them in the future if they continue down this path.

forexskin's picture

Credit events finally? Who in the hell would try to continue to hedge in the face of 'voluntary' mandatory losses. But yet $707 trillion notional and counting. This is where it really looks insane to me. Its like they buy the insurance pro forma CYA style, knowing its in effect worthless.

This tells me more about every man for himself than anything else.

The EU defaults are just the first domino.

Eireann go Brach's picture

Italy and Spain are planning on Kidnapping Merkels kids and hold them
Hostage until she prints..

Coldfire's picture

Farcivision, in 3D Keynesicolour.