CEO Of Europe's Largest Insurer Pops The Utopia Bubble: "Nothing Is Solved And Everybody Knows It"

Tyler Durden's picture




 

It's one thing for a tinfoil fringe blog to repeat, month after month, that nothing in Europe has been fixed, that Draghi's disastrous policies are merely concentraing and stockpiling even more unresolved problems - for now ignored courtesy of the gentle sprinkle of ZIRP, or rather NIRP "fairy dust" - and that just like Portugal showed panic can grip the entire continent literally overnight because everyone knows this. It is something entirely different for the CEO of Europe's largest insurer to make the same statement.

From Bloomberg:

When asking Allianz SE’s chief investment officer about the euro area’s sovereign debt woes, be prepared for an emphatic response.

 

The fundamental problems are not solved and everybody knows it,” Maximilian Zimmerer said at Bloomberg LP’s London office. The “euro crisis is not over,” he said.

 

While extraordinary stimulus from the European Central Bank has encouraged investors to pile into the region’s government bonds this year, that’s not a sufficient remedy for Zimmerer, who oversees 556 billion euros ($757 billion) at Europe’s largest insurer. Countries are still building up their debt piles, and that’s storing up trouble for the future, he said.

 

As Zimmerer was speaking, investors were getting a reminder of the volatility that was rife through the sovereign debt crisis that started in 2009, as sliding stocks and bonds of Portuguese financial institutions rippled across the region’s markets. Amid a four-day slump, yields on Portugal’s 10-year bonds ended yesterday 279 basis points higher than their German counterparts, the widest spread since March 18. The securities recovered some of their losses today, tightening the spread to 268 basis points at 10:27 a.m. London time.

 

“There is only one country where the debt level last year was lower than 2012 and this is a signal the debt crisis can’t be over, only a recognition of the debt crisis has changed,” Zimmerer said on July 9. “If the debt levels are not going down in the end we will have a problem, that is for sure.”

And crickets.

Here's the punchline: everyone knows that Draghi, the unelected dictators of Europe, and all of its bankers are lying when the say day after day that things are better. However, at least there was unanimity in the "head-in-the-sand" exercise, which recall from game theory works only if all participants in the charade agree to the ignore reality.

Today for the first time, a "member of the club" finally called out Europe on its bullshit: something that is not allowed under game theory. What's worse, he made it quite clear that everyone else knows they are not only lying to others, but lying to themselves.

What happens next may be very unpleasant, because as always happens, following protracted periods of denial, and Europe has been living in a vacuum completely dislocated from reality for exactly two years since Draghi's "Whatever it takes" speech, there is very violent convergence between reality and idiocy. And Europe is just about due for precisely that kind of denial-shattering convergence.

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Fri, 07/11/2014 - 12:12 | 4947311 So Close
So Close's picture

Insurers are getting there asses handed to them right now.

Fri, 07/11/2014 - 12:14 | 4947312 knukles
knukles's picture

So I assume he's never heard of the Nail Gun Man?

Fri, 07/11/2014 - 12:19 | 4947329 lordylord
lordylord's picture
"Nothing Is Solved And Everybody Knows It"

Governments DO NOT solve problems.  They create problems and usurp power and wealth from the people to "fix" the problems.

Fri, 07/11/2014 - 12:28 | 4947355 Pladizow
Pladizow's picture

Has there been a time in history when everyone knows things are bad and everyone can see bubbles everywhere and the market has collapsed?

Note: Everyone excludes central banks and economists!

Fri, 07/11/2014 - 12:46 | 4947398 flacon
flacon's picture

The bankers designed a system where debt always increases, and then they cry for a bailout when debt levels don't go down. Assholes!!

Fri, 07/11/2014 - 13:13 | 4947488 tickhound
tickhound's picture

Exactly... The system REQUIRES credit expansion.

Fri, 07/11/2014 - 13:47 | 4947674 Greenskeeper_Carl
Greenskeeper_Carl's picture

exactly. our entire monetary system is built upon debt. It is the ulitmate ponzi scheme, requires more and more people to keep going into more and more debt, and never actually paying it off. It works until it doesnt

Fri, 07/11/2014 - 15:28 | 4948006 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

He can always purchase a nail gun from the widow of a JPM suicide exec.

Fri, 07/11/2014 - 16:03 | 4948146 LawsofPhysics
LawsofPhysics's picture

Optimist.

Fri, 07/11/2014 - 21:44 | 4949055 CH1
CH1's picture

Honest to God, I saw a Nail Gun Supply truck a couple of days ago!

Fri, 07/11/2014 - 23:36 | 4949274 HardlyZero
HardlyZero's picture
UPDATE 5-Bulgaria to allow its fourth-biggest bank to collapse

SOFIA, July 11 (Reuters) - Bulgaria is to allow its fourth-biggest lender to collapse but could spend up to 2 billion levs ($1.39 billion) making sure customers do not lose out, as the Balkan country battles to clean up its worst financial scandal since the 1990s.

http://www.reuters.com/article/2014/07/11/bulgaria-banking-idUSL6N0PM28G...

Sat, 07/12/2014 - 05:01 | 4949539 old naughty
old naughty's picture

Mr. Insurer,

Everyone knows it...And you are just now admitting you are one of the everyone?

So what's your proposal to solve it then?

Sat, 07/12/2014 - 05:34 | 4949551 Headbanger
Fri, 07/11/2014 - 16:03 | 4948140 LawsofPhysics
LawsofPhysics's picture

Unfortunately, the monetary system is man-made horseshit.  The laws of Nature and physics really don't give a shit about that. 

 

Biological systems require calories.  - fixed it for you.

Sat, 07/12/2014 - 08:27 | 4949626 TBT or not TBT
TBT or not TBT's picture

That, and electrolytes.  

Sat, 07/12/2014 - 15:08 | 4950407 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Your nickname is very fitting here.

Sat, 07/12/2014 - 08:00 | 4949609 Dubious Intentions
Dubious Intentions's picture

And also for that expansion to be infinite.

Sat, 07/12/2014 - 05:03 | 4949540 barre-de-rire
barre-de-rire's picture

dont be stupid, they must know, coz they use the system, even a monkey usig wheel after a while willunderstand correlation between steering direction & car direction.

Fri, 07/11/2014 - 12:29 | 4947360 BobPaulson
BobPaulson's picture

You mean this guy?  http://www.niallferguson.com  Yeah, scary shit.

Sat, 07/12/2014 - 00:36 | 4949334 G-R-U-N-T
G-R-U-N-T's picture

Here's the problem, Europe doesn't intend on paying off it's debt, however they will bleed every man women and child for every dollar they can to keep power and control. The sand in the hour glass of 'indentured servitude' to the State by the masses will soon drop it's last grain and it will not end well.

What we're looking at is the destruction of Freedom!

'The Obsolete Man'

http://www.youtube.com/watch?v=ZymJAsxHbVg

 

Fri, 07/11/2014 - 15:47 | 4948077 ZH Snob
ZH Snob's picture

europe is in the same downward spiral as the rest of the world.  it really is genius how these guys make it look otherwise.

the truth of the matter will reveal itself in time: infinite debt means no one gets paid with anything but debt, and sooner or later this illusion must crumble.

Fri, 07/11/2014 - 22:44 | 4949189 MrSteve
MrSteve's picture

FRN cash currency is zero interest paying debt, good for legal tender, so we have been paying debt with debt for a long, long time.

Fri, 07/11/2014 - 12:17 | 4947323 Mrs. Cog
Mrs. Cog's picture

This is the part when the coyote has just looked down after running off the cliff before the long plunge and splat?

Fri, 07/11/2014 - 12:22 | 4947346 fonzannoon
fonzannoon's picture

when it becomes serious you have to tell the truth to spark the next 5% rally.

Fri, 07/11/2014 - 12:18 | 4947327 Ms. Erable
Ms. Erable's picture

I see hot tubs and prostitutes wielding heroin in this man's future.

Fri, 07/11/2014 - 12:45 | 4947394 pods
pods's picture

Lemme google that............

pods

Fri, 07/11/2014 - 13:14 | 4947490 Mercuryquicksilver
Mercuryquicksilver's picture

Bartender told me.

Fri, 07/11/2014 - 12:20 | 4947333 syntaxterror
syntaxterror's picture

Debt = Wealth
Freedom = Slavery
War = Peace

Relax, dude. 

Fri, 07/11/2014 - 14:18 | 4947788 TVP
TVP's picture

You forgot the most important dystopian motto of them all.

 

Ignorance = Strength

 

 

Fri, 07/11/2014 - 16:00 | 4948127 john39
john39's picture

or one that was not published....   Evil= Good.

Fri, 07/11/2014 - 16:17 | 4948190 LawsofPhysics
LawsofPhysics's picture

Wrong.

 

Knowledge is power.

 

The "game" is and has always been about power and control over real resources (including human resources).

Sat, 07/12/2014 - 15:08 | 4950408 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

History does suggest this to be the case, yes.

Fri, 07/11/2014 - 12:20 | 4947336 Liquidation
Liquidation's picture

Bullish

Fri, 07/11/2014 - 12:20 | 4947338 IANAE
IANAE's picture

The new home of M.El-Erian ... maybe some fresh thinking on their global asset exposures going on.

Fri, 07/11/2014 - 12:24 | 4947347 fonzannoon
fonzannoon's picture

the stock is plummeting up on this horrifying news.

 

http://finance.yahoo.com/q?s=ALV.DE&ql=0

Fri, 07/11/2014 - 13:13 | 4947489 pods
pods's picture

Explains why they are green.  

Things aren't fixed.

That means default.

Default means insurance payment.

So, wait, buy insurers?

Who is gonna make the bet that "ringfence" makes a lexiconal comeback sometime soon?

pods

Fri, 07/11/2014 - 14:13 | 4947771 odatruf
odatruf's picture

Backstop, baby!

Fri, 07/11/2014 - 12:24 | 4947349 pods
pods's picture

Why does these people always complain about debt not going down?  

It is like the arguments I remember about the US's balanced budget and paying off the debt. 

Duh, it's the money supply stupid.

Just nowadays, since we are in a worldwide depression, governments have to take up the slack on debt creation otherwise it all goes boom and their little farm is overrun by the escaping livestock who may or may not eat them in the process.

pods

Fri, 07/11/2014 - 12:26 | 4947353 fonzannoon
fonzannoon's picture

(Jumping up and down and waving hands) Look at me! Look at me!!!

http://finance.yahoo.com/q/bc?s=DB+Basic+Chart&t=6m

Fri, 07/11/2014 - 15:30 | 4948007 dontgoforit
dontgoforit's picture

Hmmmm.  Sucks to be a Deutsche bank.

Fri, 07/11/2014 - 16:02 | 4948135 disabledvet
disabledvet's picture

There is almost zero credit growth in the USA. That will change should oil prices collapse to say ...5 bucks a barrel.

Google search Royal Dutch Petroleum and the Masnoon field. The contract is for two bucks a barrel.

Sat, 07/12/2014 - 07:58 | 4949608 Marco
Marco's picture

And production cost in Iraq can be even lower, it matters not one iota except to the margins of Royal Dutch Shell.

Fri, 07/11/2014 - 16:02 | 4948136 disabledvet
disabledvet's picture

There is almost zero credit growth in the USA. That will change should oil prices collapse to say ...5 bucks a barrel.

Google search Royal Dutch Petroleum and the Masnoon field. The contract is for two bucks a barrel.

Fri, 07/11/2014 - 12:27 | 4947351 HardlyZero
HardlyZero's picture

Cyprus --> Detroit --> Argentina --> Portugal.

Portugal used to rule the world a long time ago.

One of these holiday weekends !!   (shorts on)

Fans are spinning.

Fri, 07/11/2014 - 13:42 | 4947640 BuddyEffed
BuddyEffed's picture

And Detroit used to rule the world and was the center of the universe in 1960s when it had the highest per capita income in the country.

Fri, 07/11/2014 - 23:41 | 4949280 HardlyZero
Sat, 07/12/2014 - 08:36 | 4949633 TBT or not TBT
TBT or not TBT's picture

Lets not get the UAW mixed up in this.  While evil, they didnt print money out of thin air to finance all new debt of the central government of our formerly non banana republic.   The UAW are...moderate evildoers.  

Fri, 07/11/2014 - 12:27 | 4947354 q99x2
q99x2's picture

My bet is that Greece will default.

Fri, 07/11/2014 - 14:17 | 4947786 odatruf
odatruf's picture

Debtors are only in default when the creditors say they are in default. Since having their debtors be in default would be catastrophic for these creditors, they will never say their debtors are in default. Ipso facto by the transitive property, the debtors are solvent. What part of this can’t you all understand?

Fri, 07/11/2014 - 16:07 | 4948161 disabledvet
disabledvet's picture

If you've extended a trillion in credit for an oil driven recovery that has failed to materialize don't expect World War Z to bail you out.

Do NOT follow this link or you will be banned from the site!