The Difference Between Bubbles And Panic: Mario Draghi Explains

Tyler Durden's picture

One can't make this up: in what was timed to be a near perfect alignment of the FOMC Minutes release and Mario Draghi' lecture in London which started, pardon the phrase, minutes after the Fed own Minutes were released (which however will not please Mario judging by the surge in the EURUSD) Mario Draghi just uttered this absolute stunner.

Keeping one’s own house in order also has a further benefit: it helps mitigate the effects of contagion. As we have seen during the crisis, those governments that had more robust fiscal positions were much less affected by contagion – at the extreme they even benefited from safe-haven status.


This protection, however, is not absolute, because it relies on the ability of markets to discriminate between sound and unsound debtors. Yet bubbles and panic happen. A bubble is a situation where markets ignore fundamentals, even if debtors are unsound. For too long, markets failed to raise funding costs for countries with unsustainable policies. And a panic is a situation where markets also ignore fundamentals, but this time to the detriment of sound debtors.

This... coming from the same central bank that just ushered in NIRP not to fix its busted monetary plumbing and stimulate lending but to put the peripheral bond carry trade into overdrive and create the biggest sovereign debt bubble of all time!!!??

One doesn't know whether to laugh or cry.


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DoChenRollingBearing's picture

Well, I am happy that Super Mario straightened us out on that.  


NotApplicable's picture

Well, sometimes ya just gotta NIRP that contagion in the bud, lest it escape the house.

NotApplicable's picture

Meanwhile, at Billionaire's Summer Camp...

Drone intrusion alerts are now in play.


NOTaREALmerican's picture

I sure hope these superior humans will create some more jobs for the inferior people.    We could sure use some.

Haus-Targaryen's picture

Dear Mr. Draghi, 

Sovereign interest rates are a measure of market confidence in the sovereign's ability to repay, what fundamentals exist that support the market's increased confidence in a country like France, over the United States?  

UselessEater's picture

Billionaires Summer Camp... awww bless, the free market at work without a hint of crony-capitalism.

Groundhog Day's picture

I've been crying for 4 years now and have no more tears to shed so i will laugh my ass off

nope-1004's picture

A bubble is a situation where markets ignore fundamentals, even if debtors are unsound


Then the world is in a bubble, stuper Mario.

Oracle 911's picture

The markets were killed about 5 years ago.

BearTrap's picture

Well, this is not printed in bold, but maybe it should have been:

"For too long, markets failed to raise funding costs for countries with unsustainable policies".

Pretty much in sync with what BIS said a while ago.

Itchy and Scratchy's picture

I'm not a fancy Goldman Sachs sharp guy but I kinda think bubbles & panics go together!

madbraz's picture

I think my head will explode after hearing this marvel of a human being whose official fix to the European problem is to have local banks buy government bonds from their countries and swap these for "cash" printed by him, in essence lowering their borrowing costs to insane levels.


His salary should be paid in greek bonds, unadultered by such schemes.

Grande Tetons's picture

One doesn't know whether to laugh or cry.

Laugh and Cry are the names of the two icecubes in my glass of scotch. 

Itchy and Scratchy's picture

Now ... the difference between laugh & cry is that when u laugh it is often when one ignores the fundamental soundness of mind & when u cry it is often at the realization of the loss of soundness of mind fundamentals. - Goldman Sachs central bank type sharp guy

fonzannoon's picture

Draghi translation: Hahaha i will say anything i want, how do you like my balls in your face?

Grande Tetons's picture

OMG.  That is fucking hilarious.  I can almost see Draghi's ball sack resting gingerly on Yellen's nose. 

ebworthen's picture

Funny.  I suppose a "sound debtor" to Mario is an Investment Bank with an umbilical cord to a central bank and the public treasury.  That baby never leaves the womb.

Quinvarius's picture

Almost every piece of economic news I see reminds of one scene or another from Apocalypse Now.

Baby Eating Dingo22's picture

IOW, stay calm and the bubble won't pop

Like sleeping with rattlesnakes

Downtoolong's picture

Drawing a line in the sand between bubbles and panic?????

Who could ask for a better battle plan than that?

i_call_you_my_base's picture

They create bubbles and then criticize the reaction to them. It's like when your older brother hits you in the face with your own fist and says, "stop punching yourself."

Itchy and Scratchy's picture

The BS gets deeper & smellier!

Late onset ADHD's picture

...and before they buy their boxes of Mr. Bubble bubble bath powder...

it would just be "common courtesy" for the "ebt card army" to at least line up outside the wallys for an hour or two on "reload" day...

just for show... after all it is showbiz, bitchez...

and on a side note... what forward thinking fucknut in big-gov sold all the giant "soup pots and ladels" from the last time around?...

holding my breath in 3,2,1...


financialrealist's picture

another example of the ineptitude of central planners...

NOTaREALmerican's picture

<<  Laugh?

<< Cry?


Re:  One doesn't know whether to laugh or cry.

Late onset ADHD's picture

i choose "c"...


please add thorazine as a choice...


Wait What's picture

"the bullshit piled up so fast... you needed wings just to stay above it"

- a favorite quote from a favorite movie

Bernoulli's picture

Brazil x Germany FIXED?

I know I know, totally off topic, but did anyone see the match? It was ridiculous.

The brazilian team DIDN'T MOVE anymore after the 0:1. They didn't try, the goalie grabbed in the air several times. Watch all the goals and watch the brazilian players before and during the goals. they did not move a bit.


Just imagine all of the following bets won:

- Germany wins the game with more than 3 goals difference

- More than 6 goals in the match

- Klose breaks Ronaldo record

- More than 4 goals in the first half

- etc etc.

tens or hundreds of millions to be made...

or is it "too unrealistic"? like "the betting mafia can't do this when the whole world is watching"??


Wait What's picture

"Jacob Bernoulli might have something to say abt the outcome"

there's probably 1 person in the world who bet on the goal spread, and the rest of the betting world lost.

Fat tail much?

Late onset ADHD's picture

hi speed trading/betting by beating the delay of the up-link, down-link times of the satellite feed...


think fast, trade faster


Wait What's picture

how quaint. that's so 1800s horse racing of you.

ever hear of that awesome innovation called the telegraph?

Bernoulli's picture

I'd just love to know if there were any big sums bet on this "totally impossible" outcome.

NOTaREALmerican's picture

If the Brazilian Mafia found out they'd murder the Brazilian team.   The Brazilain team knows it.    And,  no, the Brazilian mafia - which is a kick-ass big-dick organization like any other mostly male one - would never vote AGAINST their own slow-motion flag.  

Bernoulli's picture

Makes sense. Maybe I'm beeing too crazy.

But it's weird, no: They'd get murdered if they take money for standing around but not for being unmotivated or "shocked" and just stand around...


Late onset ADHD's picture

nope missed it... don't do the sports-sheep "trance walk"...


I prefer anestithezation by my own hand w/ big-pharma-grade narcotics...


Reaper's picture

Honest Abe had Mario in mind with his advice, that it is better to keep quiet and let people only consider you're a fool, than to open your mouth and remove all doubt

Atomizer's picture

ZIRP and NIRP didn't work. The slackers have defaulted on loan obligations. Why not man up to real problem? Do you think we're born at night, but not last night? 

Atomizer's picture

Funny. My mum had me one month later. So sick of this terrorism bullshit. Why can't we just go back to happy times? 

Who needs to be killed to bring 1967 happiness? Just venting. 

BeetleBailey's picture

Hey Mario....

a special, heart felt, bottom of my heart FUCK YOU....

You cunt

MrTouchdown's picture

So, Germany will be fine and Belgium will pick up the rest. Hey! I should be the head of the ECB!

gcjohns1971's picture
The Difference Between Bubbles And Panic

Is all about who you trust, and who you don't.

Herdee's picture

We can count on the swap lines from The Fed.(oh ya,put it on my tab,the American taxpayer can foot the bill later when we all go bust.)

realWhiteNight123129's picture

This is just absolutely fucked up. Central Fuck-upery. 


AdvancingTime's picture

And a flash crash on steroids is reality returning to this farce we call a market. I love the way reality is always being kicked out a year or two and never going to happen tomorrow. It is as if we can't handle what is coming at us and need more time.

For a long time I have been trying to develop a scenario for a market "super crash" and a reasonable map that would arrive at such a situation. Below is an article looking at how it could happen sooner rather than later.