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Albert Edwards: "The Eurozone Crisis Will Get Much, Much Worse" And "The ECB Will Print"

Tyler Durden's picture




 

Anyone expecting that the events over the last 24 hours will have changed the persistently negative outlook of one of the original skeptics, will be disappointed. The SocGen strategist falls back to that old time-tested principle in complicated situations: math and logic. His summary of events released this morning: "The increasingly frenzied attempts of eurozone governments to persuade financial markets that they can draw a line under this crisis will ultimately fail – even if this week’s measures bring some short-term relief. I have minimal confidence that governments can turn this around within the confines of the eurozone project. You might be surprised though that I feel more bullish! Why? Both Dylan and I have come to the view that the ECB will be forced, by events, to monetise debt in the GIIPS and beyond. And if investors believe the governments in Spain and Italy are bust, then Germany, France, and not forgetting the UK and US, are far, far worse." To be sure, we may see a brief respite as we get the traditional post-TARP knee jerk reaction, only for markets to digest the sad reality of the situation in the proceeding 48 hours. And what will that imply? To Edwards, it will be nothing short of the realization, that even with €1 trillion (or more), the ECB will have no choice but to commence outright monetization as well. And the real question will be whether or not "Germany, will leave the eurozone after being over-ruled on the ECB (again!) and in the face of such monetary debauchery?"

Looking at the macr Edwards, first points out the unsustainable fiscal picture at the "other" countries, assuming one applies the same logic to them as to Italy:

Italy never "enjoyed" a boom to suffer any bust. And on many measures, including reputable attempts to take account of off-balance sheet liabilities, Italian public sector debt fares well on cross-country comparisons (see chart below). These off-balance-sheet liabilities will now increasingly become visible to all. Who then will be really bust?

The complexity of Europe is only exacerbated by the feedback loop with a recessionary America:

Regular readers will know we like to use leading indicators. These have been weakening for some months in the US and elsewhere. We have not highlighted the Economic Cycle Research Institute's (ECRI) weekly leading indicator for some time, although it is as weak now as it was last year. But, unlike last year, this time around the ECRI have put out a rare recession call - link.

 

Lakshman Achuthan, the ECRI's COO notes that they made the recession call only after an array of economic indicators showed a “pronounced, pervasive and persistent” downturn consistent with a recession. “By contrast, in the summer of 2010, when some market bears interpreted the decline in one of the institute’s indexes as a signal that a recession was in the offing, the institute said the pattern pointed not to recession, but only to weakness.” (Does he mean me? Surely not!) The last time we entered a recession with unemployment this high was back in 1937 (see right-hand chart above). This is indeed a crisis.

 

Analyst optimism on profits has also slipped sharply recently (see left-hand chart above, optimism defined as EPS upgrades as % of all estimate changes). We find the change in optimism (dotted lines in both charts above) is a good leading indicator for the official leading indicators (see right-hand chart above). This signals continued weakness ahead.

But enough about the rest of the world. The ticking time bomb in Europe is and has always been Italy, and specifically its horrific governance structure.

With Italian 10 year bond yields once again pressing towards 6% in recent weeks, they are definitely still in the eye of the storm. The trigger for this  was back in early July, when Italian Prime Minster Berlusconi turned on his well-regarded Economy Minister. Reuters reported on 8 July that "Speculation is growing that Italy's Economy Minister Giulio Tremonti – credited with shielding the country from the eurozone debt crisis – will soon be forced out of government, which would further raise the heat on Italian bonds… Tremonti overcame cabinet resistance to push through a tough austerity programme last week, but now looks increasingly isolated and appears to no longer have the full support of Prime Minister Silvio Berlusconi.

 

"He thinks he's a genius and everyone else is stupid," Berlusconi said in an interview with Repubblica daily on Friday."He is the only minister who is not a team player," Until this untimely outburst, Italian bonds yields had consistently traded below Spanish yields by about 75bp (see chart below). Now they trade at a clear 50bp premium, with yields once again pushing up close to 6%. Belgium, without a government to speak of (an advantage?), but also suffering from a very high government debt/GDP ratio, has by contrast managed to keep below the market's crisis radar. Italy has been ill-served by its politicians for dragging the country to its knees unnecessarily. It could/should have escaped this debacle.

Albert concludes that "the real issue is Italy's incredibly low productivity growth (see top right-hand chart above). Hence, having been in excess of 2% yoy in the late 1990s, Italy's trend GDP growth rate is now barely positive on Vladimir's estimates (see left-hand chart below) and investment in people is poor (see right-hand chart below). The near-zero trend rate of growth means that Italy simply cannot grow its way out of its debt and will remain highly vulnerable to market shocks."

Furthermore, when looking at the present, one must not ignore the future, and the future hinges on a demographic crunch: "As populations age and
unfunded liabilities increasingly appear on the balance sheet, all governments are effectively bust. Reinhart and Rogoff in their book This Time is Different: A Panoramic View of Eight Centuries of Financial Crises - (link) show that there is no magic public sector debt threshold that determines when a crisis hits. It happens when the markets decides it is time to happen."

And going back full circle to the most recent events, Edwards redirects to a new and interesting question: not whether this bailout attempt will succeed: it won't; not whether the ECB will be forced to step up to the plate and monetize: it will, but whether or not Germany, after being once again overruled by Europe will say enough, and leave the eurozone.

Dylan and I feel more optimistic about the medium term. The current eurozone talks will not solve this crisis and it will get worse - much worse. But we would agree with the well known eurozone commentator, Paul de Grauwe of the Leuven University, who wrote “Everyone needs the ECB to step up to the plate. The ECB has no excuse not to act. In trying to keep its monetary virginity intact, the bank threatens to destroy the eurozone. 

 

The ECB will have to choose between its two most cherished ideals: the euro or its hard money principles. Notwithstanding some legal issues to get around and Germany being outvoted, we think the impending threat of a euro break-up will force the ECB to begin printing money, very reluctantly joining in the global QE party. Let's be clear - neither Dylan nor I view ECB monetisation as a "solution". Indeed its actions will mirror those of Rudolf Von
Havenstein, president of the Reichsbank in the early 1920s. He kept printing because he was scared of the mass unemployment that would ensue if he stopped - link. The question for me is not if the ECB will print, but rather will Germany leave the eurozone after being over-ruled on the ECB (again!) and in the face of such monetary debauchery?

In other words, as we have been saying for over two years, the fundamental question boils down to whether the opportunity cost of being part of the eurozone and funding the entire continent is greater than the loss of returning to the Deutsche Mark and abandoning the implicit peg which has kept the country's "currency" about 50% lower than its fair value since 1999. Last night's decision will bring the answer that much closer.

 

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Thu, 10/27/2011 - 08:01 | 1816569 MiningJunkie
MiningJunkie's picture

Just BTFD and remember that raising cash is raising shit. Eurozone and U.S. bankers are trashing the integrity of their respective currencies and they know it. SHORT cash; don't go LONG of cash by selling assets like stocks and commodities. The worst trade EVER in Zimbabwe was selling stuff to buy cash because you wanted to get "defensive".

Never underestimate the replacement power of equities within an inflationary spiral.

Ask an old German how 1921-23 was....

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

Thu, 10/27/2011 - 08:05 | 1816577 SheepDog-One
SheepDog-One's picture

In the Weimar Republic the people had the money, today the people are broke and the banks hoard the printed up fiat.

Thu, 10/27/2011 - 08:31 | 1816649 agent default
agent default's picture

And that's why stimulus programs will fail.  Banks will not be able to lend, not because they don't have liquidity, but because there is nobody credit worthy, or willing to get into debt.  This fine point is however seems lost to our Great Dear Leaders.

Thu, 10/27/2011 - 08:35 | 1816657 MillionDollarBonus_
MillionDollarBonus_'s picture

"Italy's low tertiary education achievement stands out (Figure 3)”

This is what I've been saying all along. The public is clearly not educated enough to be setting prices. This is why top European economic advisers convinced European politicians to implement a short sale ban on financial stocks and sovereign credit default swaps. Top economists understand very well that the publics' perception of reality is irrational and uninformed, and this is why they are proactively seeking price controls to stabilize the markets. Goodness knows the mess we'd be in without price controls on interest rates and wages, which have delivered upward mobility and social stability despite prevailing free market forces. I genuinely believe that the current economic system is falling apart, and it is time for us to build a new world economic order in which only professionals are able to control capital allocation, for maximum prosperity, liberty and freedom.

Thu, 10/27/2011 - 08:45 | 1816703 machineh
machineh's picture

Good to see you here at ZH, Professor Kurgman!

Thu, 10/27/2011 - 14:43 | 1817440 sqz
sqz's picture

fundamental question boils down to whether the opportunity cost of being part of the eurozone and funding the entire continent is greater than the loss of returning to the Deutsche Mark and abandoning the implicit peg which has kept the country's "currency" about 50% lower than its fair value since 1999.

Germany is too addicted to their export market which at €1.15 trillion accounts for more than 30% of GDP per year. Re-introduction and revaluation of D-Mark by 40% minimum would dramatically increase their costs of exports and introduce their former captured members of the Eurozone as competitors. If the EZ remained intact it would devalue considerably, if it broke-up and sovereigns returned to domestic currencies, they would devalue even further than within the Euro. Regardless, Germany would be fully exposed to not only some already powerful export markets, but competitors with devalued/devaluing currencies, including US dollar. Weigh all this against reducing the future purchasing power of German taxpayers (or to be more specific the future purchasing power of the creditor nations within the EZ).

In my opinion, that makes it inevitable, particularly in the context of a slowdown in global growth, that Germany will *first* allow the ECB to keep expanding their balance sheet, printing and becoming a lender of last resort (very shortly) and then be possibly forced to leave the Eurozone much later, at least two to three years from now.

This is likely why gold has resumed an upward trend. The printing presses are here to stay, even by the ECB, and even if they are no solution to anything.

It's a printing war out there. The US is smacking everyone else around with $14+ trillion in bailouts since 2008, but the ECB will soon join the big guns with €2+ trillion.

Thu, 10/27/2011 - 08:48 | 1816717 Sophist Economicus
Sophist Economicus's picture

Either you're joking (very funny) or you're a joke (sad)

Thu, 10/27/2011 - 09:31 | 1816879 Going Loco
Going Loco's picture

He is an agent provocateur. All her posts are like this. It's either sarc or sick, no way of knowing which at this stage.

Thu, 10/27/2011 - 10:57 | 1817225 Errol
Errol's picture

'Tis splendid satire : )

Thu, 10/27/2011 - 09:29 | 1816863 Shocker
Shocker's picture

I have a good feeling that this bailout package is going to work ......:)

Thu, 10/27/2011 - 10:05 | 1817015 MantiXX
MantiXX's picture

OT- I know I'm new here but can you actually respond as a person?  I think you're a CIA BOT.  One of those new AI BOT's thay've got for trolling the net and posting positive govt crap. Seriously, if you're not, post something a human would say, not this perfectly contrived crapola thats always so pro big govt.

 

Thu, 10/27/2011 - 10:30 | 1817119 BigJim
BigJim's picture

Excellent trolling. Thanks for the laugh!

Thu, 10/27/2011 - 10:47 | 1817191 pupton
pupton's picture

Yes, the market is too stupid to function and must be led by the hand by central planners...Sheesh...it's funny when you actually see somebody who believes that horse manure...

Thu, 10/27/2011 - 12:20 | 1817556 BadKiTTy
BadKiTTy's picture

Hahahaha....... Quality"
Please keep it up. You really do give me the best laugh of the day. :)

K@

Thu, 10/27/2011 - 08:31 | 1816650 He_Who Carried ...
He_Who Carried The Sun's picture

OkOk, but in the meantime I am going to get long in order to make some doe, if that is alright with you...

Thu, 10/27/2011 - 08:36 | 1816668 SheepDog-One
SheepDog-One's picture

Go for it, no one stopping you. Im out here though to hell with this. Have fun!

Thu, 10/27/2011 - 09:00 | 1816758 He_Who Carried ...
He_Who Carried The Sun's picture

"The U.S. economy grew modestly over the summer after nearly stalling in the first six months of the year, lifted by stronger consumer spending and greater business investment.

The Commerce Department said Thursday that the economy expanded at an annual rate of 2.5 percent in the July-September quarter. That's nearly double the 1.3 percent growth in the April-June quarter, and a vast improvement over the anemic 0.9 percent growth for the entire first half of the year."

If it wasn't for the unemployment we'd be back on our way to happy days, but the US won't hire until multinationals get a deal to repatriate their EX-US stockpile of cash and as they're making money anyway, incentive and pressure to do so is very low...

As the US 4th quarter is usually the strongest, risk is ON now... I'll wade back in....

Have fun!

Thu, 10/27/2011 - 08:28 | 1816636 PY-129-20
PY-129-20's picture

lol - this is beyond comical. I just read some of the online newspapers here. And almost all of them are bowing down in front of Angie. Like Angie saved the entire world or so. Then you scroll down to the comments and see people running amok, really pissed off about this entire deal. Not one positive opinion. Surreal. Like this whole charade. Affenzirkus.

Thu, 10/27/2011 - 08:36 | 1816670 agent default
agent default's picture

You know, it shocks me.  These EU/FED assclowns are totally oblivious to what is glaringly obvious to the average man on the street.  To tell you the truth, I don't really care how the crisis will play out anymore, i think that it is fairly obvious by now.  but when I begin to realize the total disconnect between the people making the decisions and reality/arithmetic, and the arrogance with which they make and enforce their decisions, I get very scared indeed.

Thu, 10/27/2011 - 09:04 | 1816775 PD Quig
PD Quig's picture

"The increasingly frenzied attempts of eurozone governments to persuade financial markets that they can draw a line under this crisis will ultimately fail..."

Keyword? "Ultimately."

These fuckers are willing to destroy anyone and anything in their quest to avoid paying the price of their fuck-ups. Unfortunately, we're all going to go down the tubes together. "Ultimately."

In the meantime, there is NO asset class that won't be pissed on. Time for some domestic drone strikes.

Thu, 10/27/2011 - 09:17 | 1816834 falak pema
falak pema's picture

its arrogance and desperation. The whole western power structure depends on this, as war, the OTHER option, is verboten since the Cuban crisis days.

Thu, 10/27/2011 - 12:07 | 1817489 4horse
4horse's picture

The whole western power structure depends on this, as war, the OTHER option, is verboten since. . .  when

Thu, 10/27/2011 - 09:07 | 1816788 He_Who Carried ...
He_Who Carried The Sun's picture

You do not bet against the FED

AND you do not bet against ANGIE...

She has shown her quality as Europe can not be allowed to sink!

Where would the world go in that case? Back to petty fiefdoms?

Simple! ;-)

Thu, 10/27/2011 - 08:55 | 1816743 LawsofPhysics
LawsofPhysics's picture

Sure, and how did that work out for all those people going long from 1920-1929 again?  Got physical?  You better.

Thu, 10/27/2011 - 09:11 | 1816802 He_Who Carried ...
He_Who Carried The Sun's picture

I do not expect to be long for the next 9 years my friend, only until X-mas, perhaps April... ;-) Here are forces at work far stronger than you and I and they're pointing UP right now and I must put something on the table... ;-)

Thu, 10/27/2011 - 10:00 | 1816992 LawsofPhysics
LawsofPhysics's picture

I have something on the table and I think it may last through June even.  You are right,  the question remains, for how long do we run?  Where in that 1924-1929 market melt-up are we?

Thu, 10/27/2011 - 10:21 | 1817084 He_Who Carried ...
He_Who Carried The Sun's picture

That depends entirely on China and I think they will do all they can to mask any real trouble coming their way for some more time... Despite of all bullfrog twitter, they have a lot of firepower to camouflage things a bit longer...

Thu, 10/27/2011 - 10:41 | 1817163 LawsofPhysics
LawsofPhysics's picture

Right, never discount an entire society with that kind of power (growing every day) that will do exactly as they are told.

Thu, 10/27/2011 - 11:44 | 1817387 He_Who Carried ...
He_Who Carried The Sun's picture

Its a sad truth, but a truth nonetheless.

Thu, 10/27/2011 - 08:06 | 1816575 gojam
gojam's picture

This Monday 31 Oct, it will be exactly 594 years since Martin Luther nailed his 95 Theses to the Wittenberg Church door.

The printing press ensured that the Roman hegemony was brought to an end.

Time for a new 95 Theses and for the Internet to take down this dishonest system.

Thu, 10/27/2011 - 08:17 | 1816608 I am more equal...
I am more equal than others's picture

Luther nailed it to a church in Germany - now Germany has nailed it to a door in Brussels.

 

Kann es gibt eine größere Lüge als dies

Thu, 10/27/2011 - 08:25 | 1816620 LongSoupLine
LongSoupLine's picture

Die Wormser Dom im Baden-Württemberg .

Lived a mile away from it.

Thu, 10/27/2011 - 08:25 | 1816624 gojam
gojam's picture

It's the entire system of modern Indulgences and Simony that needs to be reformed, Germany is just part of that system.

Thu, 10/27/2011 - 12:17 | 1817536 4horse
4horse's picture

. . . and luther, as he would later learn, Eureka! and otherwise write, splattering alot more than 95feces alot further than some great schismatic churchdoor, turned out to be underwritten by just whom . . .

 

 

                                wandering

Thu, 10/27/2011 - 08:04 | 1816576 SilverIsKing
SilverIsKing's picture

Albert Edwards: "The Eurozone Crisis Will Get Much, Much Worse" And "The ECB Will Print"

SilverIsKing: "The Eurozone Crisis Will Get Much, Much Worse" And "The ECB Will Print"

(Your Name): "The Eurozone Crisis Will Get Much, Much Worse" And "The ECB Will Print"

Not hard to figure this one out.

Thu, 10/27/2011 - 08:43 | 1816696 bernorange
bernorange's picture

Let us consult the Book of Armaments,  chapter two, verses nine through twenty-one ...

 

Thu, 10/27/2011 - 08:06 | 1816579 reload
reload's picture

Sounds about right: In the end they will print, looks like todays action is already discounting it as imminent.

Thu, 10/27/2011 - 08:06 | 1816580 No Mas
No Mas's picture

Here's a hint.  Whatever information ZH posts to indicate the ruination of all things fiat will be proven wrong.  "Bank" on it!

Thu, 10/27/2011 - 08:11 | 1816593 reload
reload's picture

What do you mean by `ruination`?

Fiat nalue will continue to be destroyed - no question

will it be the medium of exchange for the foreseeable - yes.

Will you be ruined by holding fiat and nothing but fiat - yes, the trend of fiat depreciation will accelerate. If you think otherwise.....book a room in the poorhouse without delay.

Thu, 10/27/2011 - 09:02 | 1816770 falak pema
falak pema's picture

you misread him; he meant urination. As for your comment on holding fiat : unless its a Fiat cinquecento!

Thu, 10/27/2011 - 08:11 | 1816594 SheepDog-One
SheepDog-One's picture

Until suddenly theyre proven right, it will be an ugly day. 

Thu, 10/27/2011 - 08:28 | 1816632 LongSoupLine
LongSoupLine's picture

Thank you Fed intern troll...I mean "no mas" (wink, wink).

Thu, 10/27/2011 - 08:07 | 1816582 malikai
malikai's picture

Gold is fading the fuck out of the EURUSD cross.

Thu, 10/27/2011 - 08:10 | 1816589 Debtless
Debtless's picture

Shorts never learn, and rarely get the timing right. Only insiders.

Thu, 10/27/2011 - 08:10 | 1816591 The Axe
The Axe's picture

Of course this is all true...its also true that the Dow has exploded in the last 3 weeks..A massive rally...massive....

Thu, 10/27/2011 - 08:14 | 1816599 SheepDog-One
SheepDog-One's picture

And just think...all based on nothing. People can chase this all they want, Im not no thanks.

Thu, 10/27/2011 - 08:13 | 1816598 Taint Boil
Taint Boil's picture

 

 

Like Mish says:

No structural problems have been solved ......

Thu, 10/27/2011 - 08:15 | 1816603 TradingJoe
TradingJoe's picture

What goes up must come down! Today is epic for going short and stay that way! We are up 18% and counting on the S&P!!! The "pause" will be scary!

Thu, 10/27/2011 - 08:20 | 1816605 Diarhea
Diarhea's picture

When?! When is this artificial rally gonna end and be corrected?!

We're all screwed with that OBVIOUS pm's price manipulation.

Thu, 10/27/2011 - 08:16 | 1816606 Everybodys All ...
Everybodys All American's picture

Angela does not have the leadership or backbone to leave the EU. She will be run out of office I suspect and then the Germans will leave.

Thu, 10/27/2011 - 08:18 | 1816609 Peter K
Peter K's picture

Exactly.

The major benefit is that Germany, by leaving the Euro will defuse one of the two fixed exchange rates that is responsible for the global trade imbalance. The other is the USD/RMB.

Thu, 10/27/2011 - 08:36 | 1816665 falak pema
falak pema's picture

Given the dire debt statistics presented in this post and as per your comment,  exchange rates are symptoms of economic malaise, they can become cause of meltdown. It may already be too late for western world, but at least the Euro zone is trying. 

Its stays basically a political construct which must now find a financial and economic thread that allows it to decouple with the US financial system. Not easy when USD is world reserve currency and US economy is 20% of world GDP. But somebody has to start the political construct out of pax americana towards a more multilateral world governance. 

Global markets being now an inescapable geo-political reality, going isolationist is no solution to Europe's woes. It has to be all in; whence the involvement of China/Russia maybe Brazil in the Euro/IMF backed Spiv. 

Deleveraging of course stays the bitch, debt deflation via inflation as FED is doing is one way. Maybe the ECB will also be tempted. Also via maintaining growth in emerging markets is the other route, until investment can reoccur substantially in Eurozone. The role of China in this Euro construct will be an interesting piece of this (ponzi?) puzzle.

Thu, 10/27/2011 - 08:19 | 1816610 GeneMarchbanks
GeneMarchbanks's picture

Monetization: Past, Present and Future.

Thu, 10/27/2011 - 08:21 | 1816614 dcb
dcb's picture

if you want to know why I keep buying commodites, it's because central bankers only can do one thing which is print, then when another prints they say the currecy is to high and they print. I just keep buying down,

Thu, 10/27/2011 - 08:26 | 1816626 ArkansasAngie
ArkansasAngie's picture

KISS principal has been obliterated.

Financial creativity … the only thing “they” forgot to do was to multiply by PI.  Or was that divide by?

Markets going up, up and away?

Maybe … only reason why though is that there are no more markets just 1%’er’s pushing the go button.

Thanks … but I’ll stick with my cash and carry strategy.

Thu, 10/27/2011 - 08:52 | 1816728 tmosley
tmosley's picture

They accidently divided by zero.  They have just failed to process the implications of that.

Thu, 10/27/2011 - 08:58 | 1816748 ArkansasAngie
ArkansasAngie's picture

I may be biased by living in Arkansas … but the folks here abouts are becoming aware that they are being played for a patsy.  I’m not sure the 1%’er’s know that the country is simmering.   A spark could start a raging fire.

Thu, 10/27/2011 - 09:01 | 1816766 LawsofPhysics
LawsofPhysics's picture

It will, just wait.  If China is really going to prop up the Euro, then they will be selling a lot of U.S. treasuries.  Think people are pissed now, just wait.  All paper is going to zero.  More CME margin hikes coming, got physical?  You better.

Thu, 10/27/2011 - 08:29 | 1816640 Fix It Again Timmy
Fix It Again Timmy's picture

Of course the situation will get worst, fraud and corruption are epidemic in every government simply because they do not have to earn their income through ingenuity or hard work - they get their money by picking the pockets of their citizenry or by putting future generations under serious debt.  Under those conditions of essentially free money, why would anyone act responsibly?  Politicians are very fond of easy come, easy go, then get a job as a lobbyist when your term is up...  Good work if you can get it!

Thu, 10/27/2011 - 08:34 | 1816659 LawsofPhysics
LawsofPhysics's picture

Don't forget the free health care for life.  Nice perk.  As I said last friday, we are all about to get a lot richer.  The question I have now is, now that the bond vigilantes were successful in jacking the rates up on Greek debt in order to, among other things, force bigger haircuts, who's bonds will we, ah er, I mean they, sell next?  Hedge accordingly.

Thu, 10/27/2011 - 08:47 | 1816712 disabledvet
disabledvet's picture

simply not true. you would not have the internet were it not for the government. nor radio. nor nuclear power. nor batteries. nor rockets. you would not have the home you live in. the roads you travel on. the bridges you travel over. you would not have your "planned community." indeed without government you would still be piling one piece of shit on top of another and calling it a job. and from what i can tell that's where we're headed. now who else wants to piss off the bond holders who financed all this stuff? http://www.youtube.com/watch?feature=player_detailpage&v=-kjWBgA81LM Here's one:

Thu, 10/27/2011 - 08:59 | 1816751 LawsofPhysics
LawsofPhysics's picture

Don't confuse people with facts, they always have to learn the hard way.  Like I said, I wonder who's bonds will go bidless next.  If China props up the E.U. then they are going to have to sell a lot of U.S. treasuries.

Hedge accordingly.

Thu, 10/27/2011 - 10:01 | 1816997 LawsofPhysics
LawsofPhysics's picture

Check that. don't hedge, as hedges no longer pay out.

Thu, 10/27/2011 - 09:03 | 1816773 jdelano
jdelano's picture

Ms. Warren, please STFU

Thu, 10/27/2011 - 10:55 | 1817216 BigJim
BigJim's picture

The state robs people at gunpoint, takes a cut, then pays for research with some of the stolen money - research that would almost certainly have been done by private citizens and industry, and in larger quantities without a parasitic government sucking value out of the economy - and then claims 'credit' for any discoveries.

Nuclear power? Thanks a fucking heap. If industry had been allowed to develop it, we'd be using Thorium rather than the Uranium and Plutonium reactors governments insisted on to feed their instatiable love of weapons of mass destruction.

Roads? Bridges? Houses? These didn't exist before the institution of modern governments? And can only be provided by government? What a load of Statist horseshit.

Thu, 10/27/2011 - 14:15 | 1818052 r00t61
r00t61's picture

Amen.

And if anyone wants to play that "government gave us all these good things" ends-justify-the-means fallacy, I can in return count up all the number of people killed by governments since the dawn of civilizations.  The Roman government gave us roads...and a lot of dead bodies.  The British government gave us lovely English country houses...and a lot of dead bodies.  The US government gave us Internet, the space shuttle, COINTELPRO, the Committee for Public Information, Operation Northwoods...and a lot of dead bodies.

 

Thu, 10/27/2011 - 08:30 | 1816643 msmith
msmith's picture

The Euro crisis will eventually push the markets much lower, but currently the markets want to ignore the problems.  This should only continue for a short while longer.  In the shorter term, "risk on" has unfolded as expected.  Equity futures are up big with the USD down big.  The ES, SPX, DX, AUDUSD, EURUSD, and USDCAD charts all have more room to run for the current moves.

Thu, 10/27/2011 - 08:32 | 1816654 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

ECB is printing...they are printing. But US QE3 intriguingly must stay on hold. Wash,rinse repeat

Thu, 10/27/2011 - 08:41 | 1816689 SheepDog-One
SheepDog-One's picture

I imagine we'll very soon see another round of 'trouble' here, after all earnings season is over. Im out here, enough of this crazy shit.

Thu, 10/27/2011 - 08:35 | 1816666 msmith
msmith's picture

The Euro crisis will eventually push the markets much lower, but currently the markets want to ignore the problems.  This should only continue for a short while longer.  In the shorter term, "risk on" has unfolded as expected. Equity futures are up big with the USD down big. The ES, SPX, DX, AUDUSD, EURUSD, and USDCAD charts all have more room to run for the current moves. http://bit.ly/rDcoCc

Thu, 10/27/2011 - 08:38 | 1816679 Eally Ucked
Eally Ucked's picture

That was ingenious, as ZH calculated this is cut of around 100 billion in Greek debt, from that 60% is owned by Greek pensions (population) so the whole cost of that big operation will be about 40 billion for banks all over Europe.
The only thing we don't know is how the CDS market will survive that and in consequence sovereign bond market reaction to it. But that's future and the law of unpredicted consequences will kick in at some time.

Thu, 10/27/2011 - 08:43 | 1816697 SheepDog-One
SheepDog-One's picture

You know the most ingenious part? Theyve succeeded in concentrating on a 100 billion problem for months, while ignoring our debt which makes theirs look like nothing. Reality will come back with a vengeance soon.

Thu, 10/27/2011 - 08:58 | 1816750 Eally Ucked
Eally Ucked's picture

Of course I understand that bullshit, I'm talking about current moment, no new money has been found and never will be, but as you can see it, it's the reason for bullshitters to rejoice for how long, will see.

Thu, 10/27/2011 - 09:10 | 1816786 Esso
Esso's picture

Evidently they're going to keep this ponzi rolling until the bottom 99% is completely strip-mined. What they need is a good ol' World War to get these pesky 99 percenters across the River Styx and out of the way.

Thu, 10/27/2011 - 08:45 | 1816704 sabra1
sabra1's picture

easy, you'll be able to buy CDS for the CDS you own now!

Thu, 10/27/2011 - 10:57 | 1817226 BigJim
BigJim's picture

CDSDS - Credit default swap default swaps.

Thu, 10/27/2011 - 08:41 | 1816691 MiningJunkie
MiningJunkie's picture

Just continue to gnash and gnarl over this stock rally - whine about banksters and Wall Street and CNBC bubbleheads and then watch your shorts and long cash positions evaporate. The rally has nothing to do with economic performance - it is all about the relative advantage of owning idle ERODING cash versus assets (of any ilk). The policy-makers are going to save their precious banks on the backs and blood of the proletariat - deal with it. They WORSHIP their currencies that can be taxed through bank fees and leverage. Best defence is to get all your cash OUT of the banks and AWAY from government by OWNING assets and losing/Shorting cash.

Never underestimate the replacement power of stocks within the Weimar Republic of Europe/America.

BTFDYFI

Thu, 10/27/2011 - 09:00 | 1816757 Waffen
Waffen's picture

uhm, question..

How do you know which companies will go/not go completely out of business when Hyperinflation happens?  The stock market may go up, way up, but there will be a load of dead bodies.

Thu, 10/27/2011 - 09:30 | 1816870 Stax Edwards
Stax Edwards's picture

Triple Lindy Analysis, or TLA Method will give you precisely the answer you seek :)  Cheers

Thu, 10/27/2011 - 08:41 | 1816692 Sudden Debt
Sudden Debt's picture

As I polish my silver, I suddenly realize they will turn into gold PRETTY SOON NOW!!

 

Thu, 10/27/2011 - 08:48 | 1816716 PY-129-20
PY-129-20's picture

Just stay away from the mercury.

Thu, 10/27/2011 - 08:53 | 1816733 disabledvet
disabledvet's picture

absolutely. let's look closer at your leaders at work while you do it:
http://www.youtube.com/watch?feature=player_detailpage&v=A5aaz5fIuHM

Thu, 10/27/2011 - 08:44 | 1816698 Flounder
Flounder's picture

Everyone who wants debt relief please raise your hand!

“The Greeks, who are seen to be behaving badly, get rewarded, whereas the Irish, the top boys in the class, get nothing.”

http://www.bloomberg.com/news/2011-10-26/irish-spy-reward-opportunity-in...

Thu, 10/27/2011 - 08:49 | 1816718 Sudden Debt
Sudden Debt's picture

It's like all the woman you ever dated.

you have the good girls and the slutty once. But in the end, it are always the slutty once who you spend you're paycheck on.

 

Thu, 10/27/2011 - 08:54 | 1816738 disabledvet
disabledvet's picture

but we take the good one's to places they've never been...

Thu, 10/27/2011 - 10:59 | 1817232 BigJim
BigJim's picture

You're dating the wrong kind of sluts.

Thu, 10/27/2011 - 08:48 | 1816708 Flesh Wound
Flesh Wound's picture

Italy oh Italy what will we do when you fall? Once again the Germans will have to help those poor mediteraneans. You would think being so far away http://mapofeurope.com the Germans would be able to ignore them. The world is too small now for that though. Personally any shares that I have that have any value will be sold in the next month or so while the markets are bouyed by the Greek bail out, because when "not if" Italy falls the pain is going to felt everywhere and for a long time.

Thu, 10/27/2011 - 08:46 | 1816709 junkyardjack
Thu, 10/27/2011 - 08:46 | 1816710 junkyardjack
junkyardjack's picture

double post

Thu, 10/27/2011 - 08:49 | 1816719 Migrated Bird
Migrated Bird's picture

I think it is time for ZH and similar people who were hoping for a euro implosion to accept that they lost and  move on. The latest move by EU is a just a big FU to all speculators who were betting on euro collapse even if it means bad for the euro in general. I will reiterate what I have said earlier.. Never bet against governements. If governments want you to lose, they will make sure you do... Time to move to the next weak link people

Thu, 10/27/2011 - 08:54 | 1816734 tmosley
tmosley's picture

Wow, been here all of nine weeks, huh?

Just a toddler of a troll.

Thu, 10/27/2011 - 08:55 | 1816744 disabledvet
disabledvet's picture

he's migrating.

Thu, 10/27/2011 - 11:17 | 1817288 Errol
Errol's picture

Bird has a valid point - governments can and will change the rules of the game when the game isn't going their way.  Folks who paid for CDS on Euro sovereign debt got just got boned big-time, even those who had bought them for hedging of actual holdings.

I agree with SheepDog; if you're not an insider, you're a fool to play in this game.

Thu, 10/27/2011 - 11:30 | 1817349 ElvisDog
ElvisDog's picture

trolls are so cute when they're young. Then, they become teenage trolls and stay out all night and come home smelling like marijuana.

Thu, 10/27/2011 - 09:30 | 1816873 tim73
tim73's picture

Hey, it is the meaning of life for more than a few negative nabos here. To talk trash against euro. Bullshit mountain is already so high they do not accept any further deliveries...

Thu, 10/27/2011 - 10:28 | 1817113 lizzy36
lizzy36's picture

I think you got lost on the way to cramerica. It is 2 layovers to the right of yahoo finance boards.

Enjoy your trip.

Thu, 10/27/2011 - 09:00 | 1816761 Kina
Kina's picture

The Main Stream Media is one massive turd polishing machine. They are as much responsible as corrupt politicians and bankers.

Thu, 10/27/2011 - 09:01 | 1816763 Bull v. Bear
Bull v. Bear's picture

One meets his destiny on the road he is traveling to avoid it...

Thu, 10/27/2011 - 09:01 | 1816764 Dick Darlington
Dick Darlington's picture

I love Albert

Thu, 10/27/2011 - 09:32 | 1816883 SamAdams1234
SamAdams1234's picture

Personally, I prefer Victoria.

Thu, 10/27/2011 - 09:10 | 1816796 Ned Zeppelin
Ned Zeppelin's picture

You couldn't get an "amen" from anyone on Bloomberg Surveillance this morning - all of the talking heads voiced skepticism of the "long on plan, short on details" aspect of this psuedoPlan, seemed mystified by the global equities markets cheering "Wave", and predicted much pain to come. 

Equities rally is simply algorithms trading the comparatively weakened USD, yes?

It is clear that 2 themes are present in the Eurodrama: unknown consequences of a CDS trigger, which will be avoided at all costs, and the ECB must print since there is no real capital to be had. 

Thu, 10/27/2011 - 09:11 | 1816799 Dempster
Dempster's picture
The problem as I see it is not a financial one it's a political one. 

If the ECB turned on the press it could hoover up excess southern debt.

The prudent northern lot don't want that, and not without good reason.  It's patently unfair of course.

So the question is; how do you make the prudent and sensible northern lot feel so bad about themselves, that  they will permit QE by the ECB?

In short how do you convince the Germans, that they're 'Bad Europeans'  for not allowing QE? 

Some clever political spin would be needed, and it would need to be fed through the mainstream media, but what would the subject matter be? I'll bet there's whole department working on that right now in bastion of fools.

Thu, 10/27/2011 - 09:14 | 1816820 warchopper
warchopper's picture

Dow 14K or bust! /rolling eyes/

Thu, 10/27/2011 - 09:16 | 1816823 undercover brother
undercover brother's picture

Keep coming with the negative news....The more negative it is, the higher the market goes.   Maybe if we get some positive news for a change the markets will sell off.  

Thu, 10/27/2011 - 09:20 | 1816839 Undecided
Undecided's picture

They will keep printing and printing, till everything is moved over to one world bank under the power of the elite few.  One world government and one world bank, Maxkeiser has it right only solution seems to be the Guillotine.

Thu, 10/27/2011 - 09:25 | 1816850 SamAdams1234
SamAdams1234's picture

Greek bank Runs////

 

Thu, 10/27/2011 - 09:32 | 1816859 tim73
tim73's picture

How is your euro shorting games going on now, Yanks and Brits? Lost your shirts already and AGAIN? Hey, who is calling you now? It is Margin Call Man! Right after your wives delivered the divorce papers. HA HA HA!

Thu, 10/27/2011 - 10:26 | 1817089 LawsofPhysics
LawsofPhysics's picture

I don't short, but let me ask you this, what do you think the CDS exposure is in the U.K?  I know those banks have some.  Good luck to those fucknuts in the U.K. indeed. What's that, they are a net importer of food?  I'd be careful if I were a small island that couldn't feed myself, just like the greeks are.  Selling U.K. bonds right now.  Maybe the U.K. should have joined the E.U. 

Thu, 10/27/2011 - 10:25 | 1817102 The Count
The Count's picture

I wish Merkel & Co. would let the public know what kind of pressure they are being put under to comply with all this insanity. In one of my past jobs I had to deal with upper banksters, and let me tell you, the higher up I went, the worse the language, behaviour and tempers got. At top levels you are essentially dealing with mafia boss types, do not be fooled. And these guys are not shy to put a gun to the head (literally and verbally) to anybody threatening their operation. Remeber Paulson and the one page carte blanche he gave to Bush? In a normal world Paulson would be doing time for this and failing his job.

 

 

Thu, 10/27/2011 - 10:27 | 1817107 Eurodollar
Eurodollar's picture

It should be noted that Albert Edwards is the biggest bear in town. He has missed most rallies :) 

Thu, 10/27/2011 - 14:42 | 1818149 reTARD
reTARD's picture

I LOVE printing! More "growth" coming peeps.

Thu, 10/27/2011 - 20:50 | 1819303 Tuffmug
Tuffmug's picture

The Japanese Zombie Economic Model continues it's conquest of the World.

Fraud and Bankers Uber Alles !!

Fiat Printing Macht Frei !!

Ponzi Macht Frei  !!

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