ECB Enters Currency Wars Backward As Weidmann Talks Euro... Up?

Tyler Durden's picture

Update: Just as predicted, and right on schedule a few hours after this hit the tape, here come the French: EURO GROUP MUST WATCH RISING EURO'S IMPACT ON GROWTH: MOSCOVICI

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The jawboning continues - but this time it's different. During a speech this morning, the ECB's Weidmann made it clear that the optics of EUR strength are critical to the union's survival (and Germany's balance of power vs the French):


Of course, as we head towards the G-20, everyone wants to talk their book - but in this case, Weidmann is talking the EUR up. As we have been saying, Weidmann is scared of what happens when the EUR downward slide accelerates and implicitly results in a blow up of peripheral yields leading to even faster EUR collapse, and ultimately fears of EUR redenomination. This has been the case every year and always led to the ECB having to step in and prop the EUR up - just the opposite of what every other central bank does.


Also, while Weidmann is agitating against inter-FX warfare, what he is doing, is encouraging intra-FX battles, namely between France and Germany, because while a stronger EUR hurts Germany, it hurts France much more. Recall last week's repeateds pleading by both Hollande and the French Finance minister Moscovici that the EUR is too high. Why? Because as we showed yesterday, the only winner in the European mercantilist block, is Germany.

Expect either Draghi, or Hollande, or both to come forth promptly and say that no, Weidmann is incorrect, and the Euro is quite overvalued, irrelevant if it is "seriously" or not.

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maxmad's picture

I guess it makes sense in this crazy world!  Up is the new down!

Rubicon's picture

Give me some of that weed man

hedgeless_horseman's picture



camaro68ss's picture

aww yes, this should help Euro exports. lol

Ghordius's picture

this short-term thinking about jawboning and talking their book is fine, and explains often a lot

yet Weidmann is imho not "talking up" for short-term advantage, he is talking about mid- and long-term

I presume this is unknown to many, and yet it's a BuBa tradition

disabledvet's picture

The irony that in the USA we have "free money for all" and have only accelerated the "double dip" should be lost on no one. Perhaps you could enlighten an American or two with your simple wisdom....

Black Forest's picture

Not to forget that Freiburg where Weidmann spoke is located just a few miles from France, and the inviting institute is named after Walter Eucken, an ordoliberal economist:


Banksters's picture

A Priest, Pedophile and Con-artist walk into a bar...

He orders a drink...

Navymugsy's picture

How can all of these CB turds be devaluing currencies or talking about devaluing their currencies and gold/silver are doing diddly? Unfuckingbelieveable!

Shell Game's picture

Patience...   The 2 year price:fiat consolidation is setting up an impressive leg up. 


narnia's picture

Imagine what the price of gold would be if the central banks weren't buying record amounts of it.  

spanish inquisition's picture


"That is why all currencies in the world need to be under the control of one body. Preferably run by a few impartial select white Europeans."

Sudden Debt's picture

The reason the euro is up, is called the BERLUSCONI BONER EFFECT!

Sudden Debt's picture


and this entire market isn't seriously serious

SDRII's picture

NYT mounts M&A bid for PRAVDA

falak pema's picture

back door entry into a hammer and a sickle.


bank guy in Brussels's picture

Weidmann and Germany are getting ready for when the southern countries, including France all leave the euro

And the new 'core' Germanic euro is at 1.60 - 1.75 USD or so ... even after the German bank and insurer implosions

Bunga-bunga will start the dominoes rolling ...

And the euro will be Germany and Austria, Benelux Low Countries and Scandinavia ... with Switzerland tagging along with a peg at the higher level

The sooner it happens the better

Go, Berlusconi!

FunkyOldGeezer's picture

If the Euro isn't overvalued why have the Swiss forgone their very publicly announced peg to it? Up until September, the Swiss Franc was sticking to it like glue, but since then it has been allowed to somewhat roam free.

Orly's picture

Because with the Euro at relatively low levels, it was the Swiss Franc that was relatively over-valued, killing their exports of very expensive machinery.

The Swiss would love for the Euro to climb higher and higher, not the other way around.



Addo:  Please check out SDR's link below.

Ghordius's picture

+1 for the Swiss position re the EUR - you just have to look what they export/import and to/from where

narnia's picture

Weidmann is correct.  Devaluing currency doesn't help competitiveness.  

The Keynesians want this full of shit "currency war" narrative.  The truth is central banks act or don't act for 2 primary reasons: (1) to benefit or bail out members and (2) to facilitate fiscal spending.  These wankers aren't going to come out and say, we're short term propping up our member banks and monetizing debt...  but that's what they're doing.  Saying they are doing it for export support is a total bullshit cover story.  

Super Broccoli's picture

why are we listening to that guy, he only has a paragraph on wikipedia !!!!

THE DORK OF CORK's picture

Sorry Weidmann


Governments remain in debt to the banks.


They can solve that problem pretty easily........


Is that your suggestion ?


The central problem with the euro remains.

It is the most extreme banking currency on the planet -  divorced from the former political / economic hinterland of its users.


Wether it is over valued or undervalued is not the point.


Its a currency that cannot be used for domestic exchange  / payment of private debt

It is both too hard and yet too brittle.


Ghordius's picture

I disagree - the most extreme currency on the planet - totally divorced from the political/economic hinterland of it's users was.. is..





what you call "married to the political" is just monetization

THE DORK OF CORK's picture


I don't buy the milk and eggs with philharmonics.............


i.e. its not really accepted as a currency.

Its a financial asset



Monetization you mean double entry stuff ?


Why not just let the governments print ?


If banks can create credit out of nothing , why can't goverments create money out of nothing.


You can easily take the leverage power of banks away from them with the political will.


Where exactly would the remaining physical capital go ?


Would it disappear ?

If so 

How ?

SDRII's picture

Monday is the SNB's turn

Franc Is Still Overvalued, SNB’s Zurbruegg Tells Aargauer

FunkyOldGeezer's picture

That Gold and Silver haven't risen significantly upon concerted debasing of all major currencies is a perplexing question. If Gold and Silver really are money and their value reflects fiat's, what has happened? All major fiat currencies are currently down against Gold, but Gold's price has gone sideways. Something weird has happened, something very weird, unless the stock markets are now considered currency too. Paper gains are still only paper gains, no matter where they come from.

fonzannoon's picture

what happened is things got serious. If you own physical you will have to try to hang onto it with both hands while they try to make you go broke so you have to eventually cough it up. If you own paper they will kick you in the face while they are kicking you in the balls until you decide there has to be a better way.

No one said it would be easy.

Orly's picture

This war of words is directed by Angela Merkel at Francois Hollande and has been going on for quite a while.  They have asked him in private to just shut his cake-hole but now they are doing it in public.  If it keeps up, they will publicly embarrass the poor stooge.


TNTARG's picture

Weidmann has to watch over Germany's interests. Almost the only Eurozone country with a positive exchange balance sheet in 2012. (+ 3,4% towards 2011).

The rest can struggle and die, ja, natürlich!

gwar5's picture

Brave words from Eurolandia which is recipient of stealth FED bailouts. EUR was always predicted as 'loser' of currency wars by Rickards,


"If you fellate, you must deflate." -- Johnnie Cochrane.



LongSoupLine's picture

Fucking obvious Weidmann takes his puppet talking points from fucking Bernanke.


Fuck all you Central Banking fucking wealth destroying fuckers.  I hope you fucking die in a hot fucking flaming overpriced gasoline explosion you fucks.

Michelle's picture

Let it rise so shorts can add to their positions...won't survive anyhow, may as well put them out of their misery sooner than later. This charade has gone on far too long and it's unrealistic to expect the Northerners will bail out the Southerners, it's the Civil War all over again. My bet is the South loses.

Archetype's picture

This joke of a market is just getting better every single day. This is obviously not just a currency war, it is also a european currency CIVIL war. The peace project is certanly turning out nice.......

Catullus's picture

Very strange comments.

"Let Amerika's hedge funds make money buying our debt!"

Quinvarius's picture

Must be worse than I thought over there.

Quinvarius's picture

You can't tell me that guy is doing anything other than daytrading FOREX.  I feel bad for people who don't know paper money is just casino chips.

Quinvarius's picture

This is why a gold standard or some other commodity standard, is the only thing that ever worked in global trade.  Global trade requires a stable baseline monetary unit.  Without it, trade breaks down for a number of reasons.  If you'd like to tell me teh world went off gold in the great depression to help trade, I will respond that it was leaving gold that caused the breakdown in global trade.

Venerability's picture

Weidmann versus Steinbrueck - and will be until September!

So what else is new?

I know all of you Fellas are still pumping for The Apocalypse. But despite all the propaganda distortion today, I do not think the rest of the world is, even the Crazy Japanese.

Moreover - why is it only me who ever says this? - the more PermaBears rant and rave, the worse it is for reviving your OWN SECTOR, which is not only NOT attracting New Blood yet - it's continuing to lose it.

We may be used to the idiocy. But we still don't like it.


Panafrican Funktron Robot's picture

There are a few misconceptions of the ZH community that I see being repeated quite a bit:

1.  Permabear

2.  Apocalypse

I would suggest that opinions generally run the gamut, but in general:

1.  Agnostic regarding the direction of the stock market

2.  Have significant concerns regarding systemic risk, and utilize reasonable preparations such as the ownership of weaponry, gold, durable goods, and have at least some plan around sustainable sources of food and water.  This is in-line with standard preparations that have historically taken place amonst the middle and upper classes in times of heightened systemic risk.  Remember, most of us come from a European lineage in which there was a great migration to the United States from very, very unstable and highly militaristic/high debt governments in Europe.  We are simply following good wisdom from our elders.  

Dareconomics's picture

The euro is so weak for Germany that a little bit of strength actually will tamp down inflation while the export machine keeps humming:


orangegeek's picture

The Euro has to be pushed up.  If the Euro collapses, the US Dollar will rocket and these markets will likely fall.


An overlay of the monthly USD and the SP500

From Germany With Love's picture

I'm fine with a strong Euro. German products will still be in demand. In fact, up a point, high prices can increase the value of a brand.

I'd rather have a strong Euro than a debased one. Drive down your currencies, rest of the world. I'm fine with that. Go ahead, make my day. As inflation catches up to money-printing every short-term gain you have won will be offset by economic uncertainty about the stability of your currency.

trendybull459's picture

well,let me too start my currency war!What the hell bunch of parasites using the people trust to present money at own playboy stages?

vote on FED in our poll or help people(no money needed) making good things: