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The Last Time the Euro Hit These Levels, Europe Was in Total Collapse

Phoenix Capital Research's picture




 

Remember when ECB President Mario Draghi stated that officials were unanimous in being willing to stimulate further if the current round of stimulus failed to get the EU out of its economic depression?

 

For those who missed that comment, which pushed various EU nations’ sovereign bond yields lower, it was made three weeks ago:

 

Spanish government bonds advanced for the first time in four days as European Central Bank President Mario Draghi said officials were unanimous on being willing to introduce further stimulus measures if needed.

 

Italian securities also climbed as Draghi said the ECB’s current stimulus policies will have a significant impact on its balance sheet, causing it to expand toward the level it was in March 2012. The central bank, which has already started purchases of covered bonds, is set to start buying asset-backed securities this year. Benchmark German 10-year bunds were little changed.

 

http://www.businessweek.com/news/2014-11-06/german-bond-gain-pushes-yield-toward-three-week-low-as-ecb-meets

 

Well, lo and behold, Draghi lied about that.

 

European Central Bank executive board member Sabine Lautenschlaeger on Saturday signaled she would oppose having the ECB purchase government bonds of eurozone countries unless there was a clear threat of persistent consumer price declines.

 

Her remarks, from a prepared speech at a conference in Berlin, contradicted the more urgent message conveyed recently by ECB President Mario Draghi and his top deputy Vitor Constancio to bring inflation higher. And her comments suggest that if the central bank does press ahead with government bond purchases, it risks doing so despite opposition from the euro bloc’s most powerful member, Germany.

 

http://online.wsj.com/articles/ecbs-lautenschlaeger-opposes-government-bond-purchases-1417257394

 

This isn’t the first time Draghi has lied. Indeed, the entire “Europe is saved” theme being thrown around by the financial media was all predicated on a lie: Draghi’s famous claim that he would do “whatever it takes” to save Europe.

 

No one bothered to check if the ECB cannot buy sovereign bonds (it can’t… the EU charter doesn’t permit it) or if the ECB would even be able to prop up the insolvent $40 trillion EU banking system (which is leveraged at 26 to 1 by the way)… everyone fell for the big lie.

 

Instead, investors plunged in, pushing several countries bond yields to multi-century lows and EU stocks through the roof.

 

Interestingly, the Euro is now trading at levels not seen since 2012 (a time when most investors thought the Euro was finished… which lead to Draghi’s initial “do whatever it takes” lie). Apparently today that is a good thing. What a difference two years and couple of lies makes!

 

 

Today the Euro is on the cusp of breaking critical support. Draghi will likely see this as a success (he wants inflation). More likely, it will bring in another round of the EU Crisis (the same line was hit when Greece imploded in 2010 and when Spain imploded in 2012).

 

The next round of the EU Crisis beckons…

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

http://www.phoenixcapitalmarketing.com/roundtwo.html

 

Best Regards

Phoenix Capital Research

 

 

 

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Tue, 12/02/2014 - 04:03 | 5507715 HardlyZero
HardlyZero's picture

Nice chart.

Today the Euro is on the cusp of breaking critical support. Draghi will likely see this as a success (he wants inflation). More likely, it will bring in another round of the EU Crisis (the same line was hit when Greece imploded in 2010 and when Spain imploded in 2012).

This time will it be Portugal or Italy or France ?   

Large change afoot, every 2 years !

Tue, 12/02/2014 - 01:50 | 5507585 demur
demur's picture

What no one seems to get is the fact that there is no real economy. 70 million US jobs out of 137 million reside in government, health care, education and RE. In other words plunder, disease, indoctrinantion and debt. These "sectors", except for the last, not only survived through 07-08 but proliferated and have so since. How is this possible? I think we all know the answer.

On top of these Fed induced children destroying industries; leisure, hospitality, law, insurance, finance and retail make up about 40 million more "jobs". In other words, pleasure, corruption, plunder, irrelevance and corporate fuedalism. My hunch is these are somewhat if not heavily dependent on the GHER "jobs" above. 

Manufacturing is only 8.7% of total jobs but should be the foundation upon which all jobs depend. This upside down perversion is possible due to the dollars world reserve currency status, allowing the central bank to print unfathomable amounts of money and government to go into unprecedented debt. In this light, or rather darkness, I don't see SDRs doing any good, especially since the US is the principle issuer. Can you say the greatest tribulation the world has or ever will experience?  

Tue, 12/02/2014 - 01:12 | 5507538 SAT 800
SAT 800's picture

The Euro; the little currency that couldn't.  Also, the Euro,  the Currency with a Past; but no Future.

Tue, 12/02/2014 - 04:50 | 5507743 jonytk
jonytk's picture

nonsense!, he lowered the euro without actually printing money and lowered the interest rates of the PIGS without actually buying the bonds. Genius.

I would call the bottom on the euro now if not because he actually will have to print to prevent deflation.

Tue, 12/02/2014 - 00:04 | 5507409 TulsaTime
TulsaTime's picture

The euro bazooka, nothing but a yearning wrapped in a good intention, backlit by by the fires of the cities burning.

Mon, 12/01/2014 - 22:08 | 5507042 lasvegaspersona
lasvegaspersona's picture

All Draghi needs to do is keep the euro intact while the dollar makers decide how they will overcome this recent bout of deflation. Sooner or later the Fed will be unable to control some part of the system and the dollar will find it's true value. 

It will be all euro then.

Tue, 12/02/2014 - 06:14 | 5507798 Ghordius
Ghordius's picture

lasvegaspersona, re "It will be all euro then"...: thanks, but no, thanks

Mon, 12/01/2014 - 22:49 | 5507150 medium giraffe
medium giraffe's picture

Your assets will be retained by the state and you will be given partial value in SDR credits. 

After registration and evaluation you will be selected for work detail specific to your skills. 

You will recieve one month's forward pay in SDR credits upon commencement of your contract. 

Accomodation will be provided. 

Please direct any questions to your local Department of Law. 

Under no circumstances attempt travel beyond the Blue Zone. 

Tue, 12/02/2014 - 00:13 | 5507420 Thanatos
Thanatos's picture

Hey man,

That is pretty good stuff.

Are you planning on taking a position with the new "management team" if you get a tap on the shoulder?

All joking aside, that is very, very much like what I would expect to transpire should a sudden dollar collapse happen.

At least in certain areas.

Other areas may never really know WTF happened.

A Prosecuting attorney told me once: "There will be fences at some point in the future. That's not important or surprising. What's important is which side of the fence you end up on".

 

 

Mon, 12/01/2014 - 23:40 | 5507357 Buck Johnson
Buck Johnson's picture

This might just happen in the future, never know.

 

Mon, 12/01/2014 - 23:32 | 5507340 Paveway IV
Paveway IV's picture

"....After registration and evaluation you will be selected for work detail specific to your skills..."

...or you will be selected for rendering, microwave dessication and disposal. Individuals selected for this service are asked to remove all coins, metal objects and jewelry and deposit them in the appropriate forfeiture bins marked "Jewish Bankers Benevolent Fund" located throughout the industrial microwave reception rooms. You will also be awarded one month's forward pay in SDR credits and will be asked to sign a consent form remitting those credits back to your respective central bank to repay the legal debt incurred by you and your fellow citizens of [insert country of origin here]

The [insert country of origin here] Fiscal Authority would like to thank you in advance for complying promptly with any instructions from Blue Zone financial advisory staff or contractors. 

Central banks -"We manufacture the magic in 'Spend now, pay later'"

...and today is later, Bitches...

Mon, 12/01/2014 - 21:52 | 5506960 no more banksters
no more banksters's picture

"The new measures won't bring any improvement for the economy inside the eurozone area and they know it. The economic elites and their political puppets will pursue a 'successful' completion of the experiment in Greece so that to expand it through the whole eurozone and this is their primary target. Empowering the real economy and especially small-medium businesses, reducing unemployment, will be catastrophic factors for the successful completion of the experiment, so these won't happen."

http://failedevolution.blogspot.gr/2014/09/the-emperor-spoken-again.html

Mon, 12/01/2014 - 20:55 | 5506726 TheRideNeverEnds
TheRideNeverEnds's picture

I'm already sitting on enough 50 year Spanish paper to weather the storm. I'll be aight.

Mon, 12/01/2014 - 20:31 | 5506642 lordbyroniv
lordbyroniv's picture

One day you will be right Mr. Phoenix.  One day.

Mon, 12/01/2014 - 21:53 | 5506971 silentsock
silentsock's picture

lol!!!

Tue, 12/02/2014 - 04:58 | 5507748 Haus-Targaryen
Haus-Targaryen's picture

I don't know why you guys shit on this dude all the time.  His analysis is spot on, and is essentially exactly what the Tylers have been saying forever.  

The EUR is being held together by politics for political purposes.  As soon as 1 of the 18 EMZ member nations gets a non-friendly EMZ government -- its game over, and this will be real.  

In financial analysis, you can never account for politicians maschocism.   

Tue, 12/02/2014 - 06:30 | 5507797 Ghordius
Ghordius's picture

"...you can never account for politicians masochism"

sure. let's say tomorrow we all 18 revert to our old national currencies. without a "currency grid", of course, because otherwise we'd just exchanged one formal solution (the EUR) with informal solutions (cross-pegs, "snakes in the tunnels", currency grids, etc.)

"let them float!" "let the market rule!", calls the market fundamentalist

fine. and then? the DEM appreciates to insane levels because all this money just waiting to bet on it. the BuBa is forced to print like mad just to keep Germany competitive

the same applies to a NEURO, which would have a wonderful FX cross counterpart in it's southern brethen, and everybody and his's grandmother betting on a spread

mission accomplished, you'd say. then what you are really asking for is... collapse. just some damn collapse. just something going really hard BANG!

with the hope that your gold stash will rise out of the ashes like a phoenix

meanwhile, you have badly hurt the eurozone's economy, but actually you don't really care for that, do you?

now... isn't your course actually a greater political masochism? which would btw strenghten the global reserve currency - then even small producers like me would shift their needed cash liquidity into USD? being then more stable then either N or S -EUR? because by then we are in a full intra-european currency war, like in the old times

and if the USD is strenghtened, what happens to the value of your gold stash?

in political analysis, you can never account for financial fundamentalist puritan's masochism

Tue, 12/02/2014 - 08:01 | 5507891 Haus-Targaryen
Haus-Targaryen's picture

I would imagien that since BuBa would be responsible only for Germany, deflating the value of one's savings -- if compensated for with a higher interest rate -- could be accomplished by increasing the amount of money in the system in conjunction a higher velocity of money.  e.g., instead of pumping and giving it to the banks to park in reserves, pull a page from GWB's playbook and start doing Überweisungen into peoples accounts directly.  It would help the poor as opposed to screwing them to the wall -- and as long as interest rates remain roughly where inflation is, then this would work.  Same applies for the NEURO.  

Why?  Because the Netherlands and Germany are much more similar re; monetary culture than the Italians or Spanish are.  

If BuBa was to sit and do nothing, because Germany has to import all natural resources that are value added -- the price of raw materials and energy will fall through the floor, thus compensating for the higher currency.  Essentially what is happening in Russia except in reverse (cheaper currency and export dependent of raw materials) 

MV = Py 

 

Tue, 12/02/2014 - 09:38 | 5507958 Ghordius
Ghordius's picture

"Because the Netherlands and Germany are much more similar re; monetary culture than the Italians or Spanish are." Eh? Where did you get this from? The Dutch are more similar to the English then to anybody else. Just have a look at their RE market Have a good look at real saving quotes. Or the whole history of monetary matters in Europe. Why is the average Italian wealthier then the average German, for example? Why did Latins come with the idea of the LMU? Where did the banking business start?

If you want to make real comparisons you'd have to break down to regions anyway

Sorry, I do understand that you wish for a Northern/Southern or Germanic/Latin divide that would coincide with an Austrian/Keynesian divide, but... it's way more complicated then that. This ain't Kansas, my friend

I could quip that it was Germans that managed to have one of the worst Hyperinflations in history. Unfair, but there you have it

as usual, we anyway get in the way with our different use of the very word "culture". Take German culture, for example. As such, very young, with strong French influences. When Voltaire met Frederick II of Prussia, he did not have to speak any kind of German dialect. The King spoke French as a matter of course, in the same way as all continental elites did. Though in the East, Austria used Latin as the government's language until the end of it's empire, 1918

so in what period do you base your "monetary culture" with a northern superiority?

Tue, 12/02/2014 - 05:41 | 5507780 Ghordius
Ghordius's picture

"his analysis is spot on..." I would not even call it analysis, just some "rah, rah, Europe Collapse, rah rah"

which fiat currency isn't a political power exercise? by saying that the EUR is "held together by politics for political purposes", you are just describing the beast

which btw is the whole reason why so many people request the return of gold as arbiter of monetary policy worldwide

fact is there is a reigning fiat global reserve currency, and it is not the EUR

fact is that the EUR is a supranational elastic fiat currency that has the goal of bringing price stability in the eurozone. a goal it achieved, up to now

fact is that we are in the middle of a currency war, where "lesser" currencies are routinely trashed. See Russia

fact is that other smaller currencies have to hide. see the CHF. and have the option of hiding under the EUR's skirt, compared to the HKD that hides under the USD

fact is that the real economy has to go on, regardless. and there you find my camp and it's political support for the EUR... which is not support for the megabanks

Tue, 12/02/2014 - 07:57 | 5507885 Haus-Targaryen
Haus-Targaryen's picture

You come out defending the EUR.  Go figure.  I hate it.  Birds and the Bees I suppose.  

You have, as always, many good points.  The problem with your argument is the political support for the EUR was not political support that was based out of democracy, but rather political elites making decisions for their entire populations.  See, Germany and "I acted like a dictator."  

 You see Ghordo, you habitually hold out the straw man of "everyone going back to their own currencies" which is not what I am advocating for at all.  You know this.  I have said it over and over again -- but you always divert back.  Why?  Your line of thought cannot, on a quantative level, explain why a EU with 2 differenet EUR (not everyong going back to their original currency, but 2 currencies -- one in the North one in the South) is a bad idea.  So, you try to explain it away with a variety of dodging techniques -- but the fact of the matter remains -- all the benefits you and I agree on that lend themselves to the EUR can be retained, while all the detriments can be gotten rid of if the currency zone was to simply split in half.  

But herein lies the rub.  The single EUR was put in place -- not because the various countries could, much less should share a currency -- but this was done as a step to building a "European" state. But nevermind that -- you say it will never happen, and you say you are opposed to it.  When it does happen, or they try to make it happen -- I wonder if your stance will change or you will join my came of "destroy the status quo at all costs."   Back on topic -- this EUR is premised on the idea that "all Euoprean peoples are actually 1 people and are equal in everything."  This goes to the idea of "European Socialism" as your "Its a Small World After All" view of Europe is simply a fantasy.  

Yes, weaker currencies get picked on by the larger ones.  See Russia, where there is a bear train sending it 40% lower on the year.  However, the EUR isn't immune from this either -- see the summer of 2012.  Remember Draghi's anger about how speculators were endangering his project?  Before you say "hey now Haus -- no one picked on the EUR in large numbers, but people were shorting the fuck out of the PIIGS" to which I would say you are correct.  Therein lies the rub and one of the biggest failures about the EUR neither you nor anyone in the MSM will admit -- all people need to do is start selling ANY of the 18 member zones bonds and testing the ECB's "whatever it takes" approach to things.  So if Greece comes under fire, and eventually falls apart -- it wipes out the Germans and the French as well.  However, before with their own currencies -- it would have just wiped out Greece.  

Yes, the EUR makes the good ol FX days of the mid 90s between the Franc and D-Mark a thing of the past.  Do I think those days will ever return -- no. Do I want them to return? No.  What I want is a currency zone that makes sense, and is structured in a way without the MAD debt structuring that we have -- one without the bailouts -- and one without subsidies or high unemployment.  So Ghordo -- tonight, over a nice beer alone at the closest bar I want you to do this:

Sit, think, and at least (I know this will be scary foryou) remove the idea from your brain that "All Europeans are Equal" from your mind.  Accept the Northern European nations can manage their economies and budgets much better than the Latin countries can.  Accept this as fact (because it is true) and then ask yourself -- what negatives would there be for the AVERAGE person (don't think about the EU, or such bullshit political capital of the "expirment") if the currency zone was split in half.  

Tue, 12/02/2014 - 08:20 | 5507914 Ghordius
Ghordius's picture

Haus, when the 300 Spartans with King Leonidas expended their life so that Athens' leadership would have a chance to regroup and win... They did it while utterly despising Athenian culture. They saw it as weak, mercenary, corrupt and contemptible

Later, it was celebrated as the first European success in preserving a diverse political landscape against "Asian despotism". Propaganda, as usual, but the first "We Europeans", nevertheless

History tells many lessons. Sparta's great culture... lost, at the end. But even the proudest Spartiates did not refuse the alliance with Athens et al

Which European culture is the truly superior? I don't care, I like them all anyway. Time will tell

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