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Those Damn Europeans!
I am tearing up my Eurail Pass, returning my espresso machine to Costco, and sending my gelato maker to the recycling center. Next year’s summer vacation is going to be at Coney Island, not the Italian Rivera. Those damn Europeans are spoiling everything!
The US stock markets made a determined effort to put in a bottom last week, with the S&P 500 rallying 106 points off the bottom with blinding speed. But the Europeans had other ideas.
First, France and Germany met and agreed to do essentially nothing to solve the current debt crisis. There was no announcement of any bail outs, a Euro TARP, or even the issuance of pan continental Eurobonds. All we are left with are the hemorrhaging effects of austerity. It’s as if the Tea Party had learned German and suddenly took over the Bundesbank. Then they tried to staunch market volatility with a short selling ban on all equities, a measure that has a proven history of failure.
Markets understandably gave this dreadful performance a raspberry, followed by a middle finger salute. European banks were particularly trashed, some down as much as 80% in three months. The market capitalization of the entire European banking sector is now less than that of Apple (AAPL), some $340 billion.
The Swiss were even worse. They boosted liquidity in the domestic money markets 400%, from SF30 billion to SF120 billion, in a futile attempt to weaken their own currency. There is talk of pegging the Swiss franc (SFS) to the Euro. Pretty soon, the mountain paradise’s largest heavy machinery production is going to be in printing presses.
This comes on the heels of efforts by the Swiss National Bank to intervene in the foreign currency markets, which have so far cost it SF30 billion. I watched the Japanese try to end their bear market in equities via bureaucratic fiat with the end result that the Nikkei made successive new lows.
This is Europe’s basic problem. They have a common currency, but borrowing is carried out by the 16 individual member states, creating a gigantic asset and liability mismatch. It’s as if America had no Treasury Department, Treasury bonds didn’t exist, and all of our national commitments were met through borrowing by the individual states. If that were the case, Illinois and California state bonds would be trading at 30 cents on the dollar, while North Dakota state bonds would be going for $3.
The problem is that the Europeans lack the political will to carry out the necessary reforms. No one is really interested in handing over control of monetary matters to Berlin, which would almost certainly administer them with an iron hand. The last time that happened, a certain washed up artist and rabble rouser from Austria was running the country, with unfortunate results.
The bottom line here is that the European debt crisis is going to be like one of those nasty flu’s that keeps coming back, no matter how much medicine you take. Write periodic tape bombs from the continent into your trading calendar for the next several years.
By the way, since we’re on the topic, hands up from anyone out there who knows who originated the term “European Community”? Yes, you out there in the back row, wearing the toga. Julius Caesar? Not a chance. The gentleman in the black beret and stripped Breton T-shirt, smoking the Gitane. Napoleon? Nope, but you’re getting warmer. You sir, the one wearing the lederhosen and knee socks. Yes, that’s right, you got it: Adolph Hitler. Therein lies the problem.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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MadHedgeFuckTrader:
The USD/CHF Matterhorn is moving just the opposite way. Besides Gold, USD/JPY yet another trade that you really nailed. You seem to be wrong every single time you open your mouth. Will donate you some $$ for these great contrary calls.
Someone please tell me this is a comedy piece?!
Like our the kabuki US markets are anything but a propaganda tool and a slaughterhouse for the uninformed. This author obviously doesn't understand markets 101; LOOK AT THE VOLUMES you imbecile.
Europe is transparent? Did I read that? That statement is either missing a 'not', or totally uninformed.
Refugees flooding into EU will swamp any remaining social services they have. Crime on the streets of Geneva so bad now the embassies tell their employees not to walk the streets after nightfall. Locals beaten up with regularity....
Blowback from MENA imho.
We already know the current system worldwide is filled with corruption, fraud and skewed to benefit the wealthiest and most powerful. Offering solutions and enacting them is the next step: consider secession of individual states with new govts and laws, voting by referendum, etc.
Let's have some constructive ideas rather than drama, ridicule and wanna be comedians making senseless, immature comments.
The stars in the Milky Way do not number the quantity of great ideas to fix just about all of our difficulties, problems, dilemnae, and chaos.
We who have proferred the solutions are no longer convinced that solutions trump drama, ridicule, and humor.
What is senseless and immature is posts such as yours, to wit: secession at a time of possibility, real possibility, was tried twice before under Jackson and Lincoln and you see where that got us. Lincoln and Davis lost 1.5 million men and just as many families ruined in their efforts to force (or enforce) the Southern secession states of the Confederacy back into the union.
And you think that with 320,000,000 people now that it could even get past more than a cocktail conversation?
I too favor a breakup of the ungovernable (but for the sole benefit of the top 10%) disUnited States, but it will never get off the ground in three lifetimes.
Sorry, but the top 10% only leave us with our speech to ridicule them. I do not possess the resources nor do the other 320,000,000, to do what is required in conditions such as we find ourselves: Assassinations of a few key players and their surrogates in the Financial community, who are immune to our legal system.
Read back thru the hundreds of thousands of posts and millions of words these last 3 years alone for enough ideas to drown in, many far superior to anything a government hack would come up with.
Then read the number of posts that indicate how many of them were executed, put into play. I can quickly tell you: not one.
It is not ideas that we need what we need is Execution(s).
WADR
Assassinations, executions-that's you're solution?! And you're criticizing me for suggesting secession, vote by referendum, etc? History clearly shows that an individual's freedom is under constant assault and requires masses of people willing to stand up for what is right.
If you are so convinced that your method is the only answer, then please by all means start shooting people and become the martyr we all desperately need!
Wouldn't that be exactly what's necessary?
I also suggest you try banging your head against the wall!
Just check history on Europe :)
Our politicians never agree.
When one says black the others will say white.
We'll talk about it and agree to pick a day to talk some more about it. It never comes further than that.
My country Belgium is the best example: 19 months without a government! EVERY POLITICIAN GOT A SHOT TO FORM A AGREEMENT! NON SUCCEED!
We're bureaucrats because it enables us to hide behind the bureaucracy and so we don't have to do anything. WE INVENTED KICKING THE CAN CENTURIES AGO!!
Quit your whining: If Denmark had been without a government for the last year we would have "missed" about 720 new laws, 5 new taxes and a multitude of "adjustments" a.k.a. Tax Increases - this from a "conservative" government, no less!
Fucking Bastards - I hope they go like the Polish government!
19 months without a government
And yet, Belgium seems to have carried on without a government, which leads to the question "do you really need one?" Might streamline things if you just didn't have one.
Happy to see I'm not the only one that thinks Gov is mostly useless and that Belgium is a good showcase for it.
Hitler also brought us the first "Autobahn", does this guy ever refuse to drive on a highway because of it? And it's not SFS, it's CHF.
The usual rant "arrgh! the Europeans are not screwing things up in the same fashion as we do!!".
Before there even were cans!
Did you actually have expresso with Adolf Hitler?
The failure of the globalist agenda will only be made more and more apparent over time. Hitler through militarism, without legitimacy, poor diplomacy, and over ambition, failed by making too many enemies.
Fast forward to today.
The euro is ultimately doomed, like BAC and mega financial institutions in general, because of eventual bottom-up abbandonment. Government subsidy of the banking system is doomed to falure when it isolates and creates hostility of the lower tiers of society,. The entire foundation is tax exploitation of the people, by their will and cooperation.
It's only a matter of time until the tax revolts emerge, and popular disengagement from the system becomes rampant. The backdrop of government subsidization then ceases by necessity; There just wont be sufficient government revenues to justify continued political bribery, which in turn will lead to political betrayal by the politicians in favor of the people...
When the poltical bribes and contributions start getting smaller and smaller, then we know tax revenues are really going down. When international corporations cannot make their private debts into public obligations anymore, through systemic corruption, then we know it's the time of global scale warmaking and inevitable social collapse.
We could be entering the global scale warmaking stage now, with Israel, Iran currently getting together with warship over egypt.
"in a futile attempt to weaken their own currency."
Before announcement it was $1.40 per Swiss franc, now it is $1.23
'European Community' as a dream pales in comparison to the far more dangerous Bolsheviki and their 'World Community.'
But I have a question. Are the financiers in charge of the EU cut from the same genetic material as Adolf Hitler? Or from that of Trotsky?
Trotsky
You can afford Coney Island? You rich elitist bastard!
Blatant attempt by a looter to try and hide in the masses. All scum like MHFT that have creamed peoples' savings will attempt to blend in, but his number has been taken and filed.
"It’s as if America had no Treasury Department, Treasury bonds didn’t exist, and all of our national commitments were met through borrowing by the individual states. If that were the case, Illinois and California state bonds would be trading at 30 cents on the dollar, while North Dakota state bonds would be going for $3."
What a GREAT IDEA! You are not so "Mad" after all!
No one gives a rat's ass about your gelato maker, vacation destination, etc etc etc..............
".... It’s as if America had no Treasury Department, Treasury bonds didn’t exist, and all of our national commitments were met through borrowing by the individual states. If that were the case, Illinois and California state bonds would be trading at 30 cents on the dollar, while North Dakota state bonds would be going for $3."
Which is the real world.
Europe may be screwed but at least it's transparent as to which country is a deadbeat, and which isn't.
I'd rather it be that way than how it is with Treaserve picking winners and losers based on where they have placed their children's trust fund money.
I doubt they'll miss this particular conspicuous consumer.
Would it be sensible for a European to cancel a US vacation on account of Ben Bernanke ?
What's the matter...you don't like Bernanke's strong euro policy anymore? Swap lines got you down?
STFU.
no, but on account of TSA!!!!!!
I'd have to agree about that.
I have flown the world. I have filled several passports with visa stamps. I have ran marathons on every continent.
I am proud to say that I have avoided at least 10 flights since the TSA tyranny began by choosing to drive rather than fly. Unfortunately this option does not exist on international flights. In these cases I look my oppressor in the eye and say in a rather loud voice that I OPT OUT!
Live Free Or Die Bitchez!