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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

* * *

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):

  • *WEIDMANN SAYS ECB CANNOT SOLVE CRISIS, GOVERNMENTS MUST
  • *WEIDMANN: DEVALUATION HISTORICALLY DOESN'T HELP COMPETITIVENESS
  • *WEIDMANN: IF MANY NATIONS DEPRESS FX, CAN ONLY END IN FAILURE
  • *ECB'S WEIDMANN SAYS EURO ISN'T SERIOUSLY OVERVALUED
  • *WEIDMANN WARNS POLICY MAKERS AGAINST TRYING TO WEAKEN THE EURO

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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Mon, 02/11/2013 - 12:12 | 3233502 maxmad
maxmad's picture

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

Mon, 02/11/2013 - 12:13 | 3233509 Rubicon
Rubicon's picture

Give me some of that weed man

Mon, 02/11/2013 - 12:25 | 3233556 hedgeless_horseman
hedgeless_horseman's picture

 

 

  • *WEIDMANN: IF MANY NATIONS DEPRESS FX, CAN ONLY END IN FAILURE
  • *HORSEMAN: IF EVERY NATION DEPRESSES FX, SYNCHRONIZED DIVING REIGNS
  • *HORSEMAN: SYNCHRONIZED DIVING MAKES EVERY GOVERNMENT A WINNER, EVERY HOLDER OF CURRENCY A LOSER
Mon, 02/11/2013 - 12:28 | 3233586 camaro68ss
camaro68ss's picture

aww yes, this should help Euro exports. lol

Mon, 02/11/2013 - 12:40 | 3233635 Ghordius
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

Mon, 02/11/2013 - 13:06 | 3233723 disabledvet
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....

Mon, 02/11/2013 - 14:13 | 3233958 Black Forest
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:

http://www.walter-eucken-institut.de/nc/veranstaltungen/veranstaltungen-...

http://en.wikipedia.org/wiki/Walter_Eucken

 

Mon, 02/11/2013 - 12:23 | 3233569 Banksters
Banksters's picture

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

He orders a drink...

Mon, 02/11/2013 - 12:15 | 3233523 Navymugsy
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!

Mon, 02/11/2013 - 12:20 | 3233549 Shell Game
Shell Game's picture

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

 

Mon, 02/11/2013 - 12:22 | 3233562 narnia
narnia's picture

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

Mon, 02/11/2013 - 12:17 | 3233531 spanish inquisition
spanish inquisition's picture

WEIDMANN: IF MANY NATIONS DEPRESS FX, CAN ONLY END IN FAILURE

"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."

Mon, 02/11/2013 - 12:17 | 3233532 Sudden Debt
Sudden Debt's picture

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

Mon, 02/11/2013 - 12:18 | 3233539 Sudden Debt
Sudden Debt's picture

ECB'S WEIDMANN SAYS EURO ISN'T SERIOUSLY OVERVALUED

and this entire market isn't seriously serious

Mon, 02/11/2013 - 12:31 | 3233601 SDRII
SDRII's picture

NYT mounts M&A bid for PRAVDA

Mon, 02/11/2013 - 12:33 | 3233610 Orly
Orly's picture

That was funny.

:D

Mon, 02/11/2013 - 12:49 | 3233664 falak pema
falak pema's picture

back door entry into a hammer and a sickle.

 

Mon, 02/11/2013 - 12:19 | 3233547 bank guy in Brussels
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!

Mon, 02/11/2013 - 12:21 | 3233555 FunkyOldGeezer
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.

Mon, 02/11/2013 - 12:31 | 3233589 Orly
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.

:D

_______

Addo:  Please check out SDR's link below.

Mon, 02/11/2013 - 12:43 | 3233644 Ghordius
Ghordius's picture

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

Mon, 02/11/2013 - 12:21 | 3233559 narnia
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.  

Mon, 02/11/2013 - 12:24 | 3233570 Super Broccoli
Super Broccoli's picture

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

Mon, 02/11/2013 - 12:47 | 3233596 THE DORK OF CORK
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.

 

Mon, 02/11/2013 - 12:47 | 3233660 Ghordius
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..

 

GOLD

bitchez

 

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

Mon, 02/11/2013 - 13:35 | 3233813 THE DORK OF CORK
THE DORK OF CORK's picture

@Ghordius

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

 

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

Its a financial asset

 

 

Monetization ............do 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 ?

Mon, 02/11/2013 - 12:29 | 3233597 SDRII
SDRII's picture

Monday is the SNB's turn

Franc Is Still Overvalued, SNB’s Zurbruegg Tells Aargauer

Mon, 02/11/2013 - 12:29 | 3233598 FunkyOldGeezer
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.

Mon, 02/11/2013 - 12:36 | 3233617 fonzannoon
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.

Mon, 02/11/2013 - 12:30 | 3233599 Orly
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.

:D

Mon, 02/11/2013 - 12:33 | 3233609 TNTARG
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!


Mon, 02/11/2013 - 12:35 | 3233615 gwar5
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, et.al.

 

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

 

 

Mon, 02/11/2013 - 12:37 | 3233621 LongSoupLine
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.

Mon, 02/11/2013 - 12:52 | 3233670 Michelle
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.

Mon, 02/11/2013 - 12:56 | 3233687 Archetype
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.......

Mon, 02/11/2013 - 13:04 | 3233718 Catullus
Catullus's picture

Very strange comments.

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

Mon, 02/11/2013 - 13:34 | 3233819 Quinvarius
Quinvarius's picture

Must be worse than I thought over there.

Mon, 02/11/2013 - 13:33 | 3233814 Quinvarius
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.

Mon, 02/11/2013 - 13:47 | 3233866 Quinvarius
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.

Mon, 02/11/2013 - 13:52 | 3233883 Venerability
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.

 

Mon, 02/11/2013 - 17:09 | 3234683 Panafrican Funk...
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.  

Mon, 02/11/2013 - 13:55 | 3233894 Dareconomics
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:

http://dareconomics.wordpress.com/2013/02/06/two-eurozones-2/

 

Mon, 02/11/2013 - 14:38 | 3234055 orangegeek
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

 

http://bullandbearmash.com/chart/2003-dollar-falls-markets-rise-vice-versa/

Mon, 02/11/2013 - 14:46 | 3234091 From Germany Wi...
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.

Mon, 02/11/2013 - 16:22 | 3234518 trendybull459
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