This page has been archived and commenting is disabled.

Apocalypse Europe: The Smell Of Draghi's Eau De Napalm

Tyler Durden's picture





 

As we look forward to tomorrow's scorched-earth policy-fest from Draghi-et-al., Jefferies' David Zervos, in his typically understated manner, notes "I love the smell of napalm in the morning. We are back in the kill zone - Apocalypse Europe." There will be no more strategizing, no more war games, no more speeches imploring the politicians to act. This is the real deal - a full scale European led global financial crisis that requires immediate and aggressive response from the only entities with the authority to act in the world financial "theatre".

Jefferies' David Zervos, I love the smell of napalm in the morning  

On the battlefields it’s not the heads of state, but the generals, colonels and majors that execute. These leaders have mandates - with the most important one being the dual mandate of the US Fed - "maximum employment and price stability". And now, the European fallout has become a clear and present danger to both the US recovery and the Fed's "potential" achievement of its dual mandate goals. The weak data last Friday (as well as many of the past couple months' soft economic releases around the globe) can easily be attributed to structural uncertainty emanating from Europe. And to be sure, the Fed has been warning us about this eventuality in nearly every FOMC statement for a year now - "strains in global financial markets pose significant downside risks to the economic outlook". Those risks are front and center, and there is only one key variable we need to look at to understand the level of the threat - the DXY. At 84, we are fast approaching the red zone!

Rather than discuss the evolution of the crisis response - and what that means for risk assets, the dollar and rates - I want to reprint an excerpt from our 12-Dec-2011 commentary entitled "Nurse Ratched bears down as the TBTF backlash boils". It was here that we put forth our roadmap for 2012 European crisis evolution and its impact on global markets. The views here still stand strong some 6 months later! Please read below -

--------
From 21-Dec-2011:

 

The European Nurse/Patient relationship is coming to a boil. The medicine is not acceptable to the UK as austerity also comes along with an added pill of over bearing financial market regulation. But most importantly, the medicine isn't working for ALL the patients. Political boils are brewing all over the asylum! For those that forgot about Greece, take a look at the latest news on PASOK over the weekend - the referendum man is back - http://www.athensnews.gr/portal/8/51314. Uh oh!!

 

With that in mind, every investor must make contingency plans for that day in 2012 when a red line flashes across the bloomberg news screen - "Greece misses coupon payment, CDS triggers, Drachma to return".

 

It’s going to be a very messy day. The equity markets will drop 5 to 10 percent, libor will spike and some banks will fail or be nationalized. More sovereign exits may follow and the trading days will be tense. It will be important to be liquid and agile. And it will be crucial not to get caught up with big exposures to SIFI banks, as it increasingly looks like the US and European officials want to tear these institutions apart. See the latest Gretchen Morgenson article below -

 

http://mobile.nytimes.com/article;jsessionid=CD8522211506B47FACD69A553BA...

 

The catalyst for TBTF/SIFI bank "unwinds" will likely be a Euro credit event. If there is one rule for 2012 it is - "move positions to exchanges". The world of bilateral OTC derivative trading is about to be purged. The good news however is that this credit event, and the ensuing SIFI bank run, will create a massive global coordinated liquidity response led by none other than the Colonel - QE3, CPFF, AMLF, TAF, TSLF, PDCF and TALF are all waiting in the wings. But this time the big banks will not get 800b in cash and a TLGP wrap - there will be losers. And for the rest us, a more stable world with all derivatives on exchanges will emerge.

 

The global central bank response to a fracturing of Europe and a breakdown of the SIFI bank oligarchy will be swift and aggressive, making short risk positions very difficult to cover. Further, policy will likely even preempt the Euro credit/ Sifi bank run event making short risk difficult to hold at all (much like it was in 2011). We will come out the other side with a massive risk rally and significant inflationary pressures brewing. One cannot afford to miss the exercise of the mother of all Bernanke puts! The key to 2012 is figuring out how to design a hedge for risk asset longs that brings you through the rubicon unscathed. Spoos + Blues maybe, Spoos + Agency MBS maybe, or maybe spoos + DXY does the trick. More on that later. Good luck trading.

 

------------------

I would change nothing in this analysis! All three of those trades have made it through to this point with strong return profiles. And those who tried to short risk early were smoked. Importantly, we must stay prepared for the eventuality of aggressive action by our central banks - most importantly the Fed. It’s not an easy trading environment, but with the right hedges to a long risk asset position, there are great trades to do! This has been our core trading theme for many quarters/years now and nothing in the recent developments changes that.

We should all keep in mind that the Europeans have not been able to generate an effective response to their debt/deflation crisis as of yet, and of course it is having global consequences. This is why we are here again looking into the deflationary abyss. The ECB was only set up with a price stability mandate, and its leaders are hence much more constrained than Federal Reserve officials. Simply put, the European armies were not set up with effective weapons. In the US we have bazookas, tomahawks and howitzers. In Europe, they can barely agree to fire a musket. This unfortunate set up for Europe means that they can become a serious negative externality on the world without any internal ability to fix the problem. Of course, then it becomes incumbent on the rest of the world to directly involve themselves in combating Europe’s turmoil (sadly we have seen this movie a few too many times in the last 100 years).

As we look ahead to policy responses, it is the Fed that will continue to be forced to do the heavy lifting. If the ECB had strong leaders, that were willing to take some legal risk with the mandate, we would be in a much safer place. But based on Mario's pathetic (whiny) speech to the EU parliament a few days back, it is difficult to have high hopes on this front.

The Bernanke Fed however has not let us down since the crisis turned in early 2009. So why should we expect him to sit idly by and watch Europe destroy all his hard work? He won't! And while the Greek people look set to pull the rip cord in the middle of this month, we can rest assured that as EMU fractures, losses are realized and the Euro leadership vacuum fails to contain the fallout, the Bernanke Fed will not abandon the US recovery effort. Good luck trading.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/05/2012 - 15:48 | Link to Comment TrainWreck1
TrainWreck1's picture

The European Nurse/Patient relationship is coming to a boil.

Who will stand up and lance this boil?

Tue, 06/05/2012 - 15:59 | Link to Comment TrainWreck1
TrainWreck1's picture

Good thing we have antitrust laws!

Otherwise there would just be one big bank! Hey, wait a minute, you don't suppose...

Tue, 06/05/2012 - 16:32 | Link to Comment Ahmeexnal
Ahmeexnal's picture

L.A. (and most of North America's west coast) bombarded by Fukushima radiation:

http://www.prisonplanet.com/fukushima-radiation-hitting-the-streets-of-l...

 

Right after Chernobyl blew its top, Edward Teller said on the ABC Evening News in late April 1986, “The chances of a real calamity at a nuclear power station are infinitesimally small. But should it happen, the consequences are impossible to imagine.” The plume from the burning graphite at Chernobyl initially traveled in a northwest direction toward Sweden, Finland and Eastern Europe, exposing the public to levels up to 100 times the normal background radiation.

Hope Burwell wrote, “On my first trip to Chernobyl in November 2000, I spent three days touring schools in Cherikov and the even more contaminated areas of the Mogilev district. Then we traveled to children’s hospitals in Minsk. What I saw there still shows up in nightmares: children with eyes in the sides of their heads, and children with no eyes at all, children with fingers that look like toes and children whose genitals are so poorly formed one can’t determine their sex. Those nightmares are audible with infant wails like the cries of wounded wild animals.”

CHERNOBABIES coming to your spouse's womb....

Tue, 06/05/2012 - 17:21 | Link to Comment Unbezahlbar
Unbezahlbar's picture

We are avoiding buying any fruits an dveggies from Cali until the IAEA sends their atomic scientists to LA and says, "All Clear."

Tue, 06/05/2012 - 22:49 | Link to Comment PersonalRespons...
PersonalResponsibility's picture

Did you forget your /sarc?

Wed, 06/06/2012 - 05:57 | Link to Comment Archduke
Archduke's picture

nice.  though there should be more emphasis on Midtown Investment Banks.

For example, Salomon Brothers should be in there joiing CitiCorp / CitiGroup.

 

Tue, 06/05/2012 - 17:35 | Link to Comment SokPOTUS
SokPOTUS's picture

Well...the cover pic to this article is a Muppet with a Bazooka.  That would be what I would call a 'good start'.

 

Tue, 06/05/2012 - 17:46 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

http://www.businessinsider.com/25-brilliant-insights-david-zervos-2011-12

Just so everyone gets the image to go with the writing.  He's like a nearly dead John Belushi.  Except way the fuck less awesome.

Tue, 06/05/2012 - 15:48 | Link to Comment SilverTree
SilverTree's picture

I like the smell of draghi's eau de napalm in the morning, its like victory.

Tue, 06/05/2012 - 16:04 | Link to Comment CrimsonAvenger
CrimsonAvenger's picture

Better than smelling Berlusconi's Eau de Bunga Bunga.

Tue, 06/05/2012 - 16:06 | Link to Comment brewing
brewing's picture

i like the taste of bath salts in the back of my throat...

Tue, 06/05/2012 - 15:48 | Link to Comment john_connor
john_connor's picture

sounds like the familiar strategy of stay long because Bernanke will save the world.  meh.

Tue, 06/05/2012 - 16:24 | Link to Comment duo
duo's picture

but, but, Graham Summers said the CB's weren't going to do anymore QE because it's becoming less effective every time it's used.  Who to believe?

 

Tue, 06/05/2012 - 15:50 | Link to Comment transaccountin
transaccountin's picture

The Bernanke Fed however has not let us down since the crisis turned in early 2009. So why should we expect him to sit idly by and watch Europe destroy all his hard work? He won't!

 

Another house prices wont go down moment in making.

Tue, 06/05/2012 - 15:58 | Link to Comment SheepDog-One
SheepDog-One's picture

The Bernank will surely SAVE us, he is The One!! Free moneeez!!

Tue, 06/05/2012 - 16:06 | Link to Comment resurger
resurger's picture

i wish i can FF>> to the 19 & 20 and see what he has to say .... but i have a feeling its LSAP ASAP

Tue, 06/05/2012 - 15:51 | Link to Comment francis_sawyer
francis_sawyer's picture

Muppets (with bazookas & RPG launchers) bitchez!

Tue, 06/05/2012 - 15:54 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

I think Bazooka Bert was one of the cards in my gramma's Old Maid game...

Tue, 06/05/2012 - 15:52 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Can't we just remove the word "austerity" from the dialogue.  Things will simply move along better without such distractions.

Tue, 06/05/2012 - 15:53 | Link to Comment l1b3rty
l1b3rty's picture

Test Run for Apocalypse Everywhere

http://silvervigilante.com

Tue, 06/05/2012 - 15:54 | Link to Comment Jayda1850
Jayda1850's picture

Can WB7 do a piece with bernanke as col. kurtz? The horror, the horror, the horror!

Tue, 06/05/2012 - 16:12 | Link to Comment El Viejo
El Viejo's picture

Or maybe col Klink???

Tue, 06/05/2012 - 16:41 | Link to Comment Bastiat
Bastiat's picture

A friend of mine did a Banzai7-style photoshop of Paulson's face, with on Colonel Klinck's pic, monacle and all -- it was perfect!  In fact, if I can find it, I'll e-mail it to Banzai himself.  It was up to his standards--that good!

Tue, 06/05/2012 - 16:52 | Link to Comment Walter E Kurtz
Walter E Kurtz's picture

You rang?

Tue, 06/05/2012 - 15:56 | Link to Comment carbonmutant
carbonmutant's picture

The Markets are preparing to rally on the G7 Fiscal Plan tomorrow... regardless of its comedic script...

Tue, 06/05/2012 - 16:24 | Link to Comment Conman
Conman's picture

Theres no g7 meeting or plan tomorrow. You mean ECB. Then the bearded one speaks on Thurs.

Tue, 06/05/2012 - 15:56 | Link to Comment Olympia
Olympia's picture

The end of the world is near... The ten plagues of Pharaoh “have been brought upon” the USA.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007

http://eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html

.

It is the absolute tragedy for the USA. The former illegal immigrants had become the masters of their land; the ultimate masters. The people who wanted to collaborate with the Jews to become “Pharaohs” had the same bad luck. The greedy “locust” of the Asiatic desert swapped the USA and left absolutely nothing standing. The formerly rich people of the New World have been drained of their money to such a degree that they have passed the point of poverty and are headed towards starvation. The Americans now experience desperation and trust in God. Poor and hungry people gather around the fire to warm and cast their eyes up to heaven as their last hope. These are the former planet leaders...

Authored by Panagiotis Traianou

Tue, 06/05/2012 - 15:58 | Link to Comment Bunga Bunga
Bunga Bunga's picture

If the ECB refuses to act as a lender of last resort, we will use our own mint to print euros.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/930966...

Tue, 06/05/2012 - 16:10 | Link to Comment Black Forest
Black Forest's picture

If the ECB refuses to act as my toilet paper producer of last resort, I will use The Telegraph.

 

Tue, 06/05/2012 - 16:05 | Link to Comment Vegetius
Vegetius's picture

Well its good to know that the US model worked so well for Bernanke that the solution is so obvious -

In the US we have bazookas, tomahawks and howitzers. In Europe, they can barely agree to fire a musket.

Going on the results from the bazookas fired so far, how well is that shit going?

This is not a USA v EUROPE, this is global financial corruption and the blame game only helps those that created the mess. Its about time people started to focus on the real criminals the money printers and their Economist lickspittles 

Tue, 06/05/2012 - 16:05 | Link to Comment davinci7_gis
davinci7_gis's picture

Everyone pile into MBS, Treasuries and what have you now...but keep your finger on the sell trigger when these babies skyrocket...and use your profits to buy gold and silver.... cause it's going to get NASTY!  

Tue, 06/05/2012 - 16:11 | Link to Comment q99x2
q99x2's picture

I think the Rockefeller/Rothschild merger means something different this time. This whole thing in Europe has to be cutting into their stolen wealth by now.

Tue, 06/05/2012 - 16:13 | Link to Comment Catullus
Catullus's picture

And for the rest us, a more stable world with all derivatives on exchanges will emerge.

I still don't understand why this is the case. A derivative is just an agreement to pay based on another event. That you standardize this agreement and make it exchangeable means very little. It's like saying that all contracts should be standardized and that a master central exchange planner should be able to record them and the government should regulate all agreements. The thinking leads to "there should never be any bilateral agreements whatsoever". That all your agreements are on an exchange doesn't make them any less risky.

Tue, 06/05/2012 - 16:14 | Link to Comment Cangoroo
Cangoroo's picture

Time is workng for the Euro. Finally debtors and payables created by Taget 2 will be matched, cleared and wiped off the balance sheet. Because Target 2 is a gigantic balance sheet this is no major problem and guess what will be the result? A nice clean balance sheet. This is a political hoax and about power.

Tue, 06/05/2012 - 16:22 | Link to Comment Black Forest
Black Forest's picture

This is a very theoretical point of view. In other words, I do not agree. Elections and miltary coups overshadow balance sheets.

Tue, 06/05/2012 - 16:27 | Link to Comment magpie
magpie's picture

One thing that is certain is that the fraud and uh legal malleability percolate through the system.

Tue, 06/05/2012 - 16:30 | Link to Comment Black Forest
Black Forest's picture

Sounds well-founded.

Wed, 06/06/2012 - 07:21 | Link to Comment andrewp111
andrewp111's picture

TARGET2 breaks down when a member exits. That leaves a gaping hole in the system that will never be settled.

Tue, 06/05/2012 - 16:20 | Link to Comment hazek
hazek's picture

What is this psychopathic bullshit asking for more money printing and more "aggressive central bank actions"?

Tue, 06/05/2012 - 16:27 | Link to Comment cfosnock
cfosnock's picture

This is the anwser have the Fed bailout European banks

Tue, 06/05/2012 - 16:27 | Link to Comment kito
kito's picture

In the US we have bazookas, tomahawks and howitzers....

oh, you mean the ones that misfire and blow up the ones shooting them? what kind of analysis is this? 

If the ECB had strong leaders, that were willing to take some legal risk with the mandate, we would be in a much safer place....

safer place? really? this retard of an author wants the world to unleash another printfest and somehow everyone will be better off/  how? this article is garbage. there is no effective response other than to allow nature to take its course and allow the destruction to happen. protect the bank depositers and let the fire spread to all banks, let them burn and die out. then new seeds will sprout. its the law of the universe. destruction and creation. you cant have one without the other. 


Tue, 06/05/2012 - 16:44 | Link to Comment Ghordius
Ghordius's picture

+1 "If the ECB had strong leaders, that were willing to take some legal risk with the mandate"

mmhhh... how do you traduce this to my little european mind?

willing to break the law? willing to do something criminal?

Tue, 06/05/2012 - 16:58 | Link to Comment delacroix
delacroix's picture

methinks jeffries is underwater

Tue, 06/05/2012 - 17:28 | Link to Comment VisualCSharp
VisualCSharp's picture

Yep, the trial balloons for that very thing have been floating for quite some time, now. Any day now...

Tue, 06/05/2012 - 20:17 | Link to Comment Sandmann
Sandmann's picture

The US needs a President willing to ovethrow the Constitution and dismiss Congress and the Supreme Court and rule without elections - "willing to take some legal risk with the mandate"

Wed, 06/06/2012 - 07:24 | Link to Comment andrewp111
andrewp111's picture

Those EU turkeys violated their Treaties before the ink was even dry. Law means nothing when there is no higher authority that can enforce it.  Their problem is moving to a US of Europe before the German People are ready will lead to a messy divorce.

Tue, 06/05/2012 - 16:27 | Link to Comment Crab Cake
Crab Cake's picture

Bernanke wont let us down! There are great trades to be made! If only the technocrats at the ECB were more capable wed all be more "safe"!

Hey author, fuck you. You are as much to blame in this as the rest of the criminals in dc and on wall st. Fuck you and your "safe". Youre gonna end up swinging from a lamp post soon enough, I'll wager. Good luck trading!

Tue, 06/05/2012 - 16:29 | Link to Comment Dr. Engali
Dr. Engali's picture

The Bernank won't let us down. One man to save the world "markets". What a pathetic joke.

Tue, 06/05/2012 - 16:32 | Link to Comment Ropingdown
Ropingdown's picture

This article/post is silly.  Zervos ignores the actual legal relationships defined in the treaties which empower the ECB.  He ignores the fact that Bernanke cannot afford to take on Europe's burden either politically or economically.  He can only afford to prevent rapid deflation in the US...maybe.  Central banks cannot rescue the world when a global slowdown is underway, and it is.  They know they need to keep plenty of dry powder at such a moment.  The US election also is a definite limiting factor.  Germany does need to build a more vocal and supportive alliance quickly, one including Nederlands, Finland, et al.  Then it needs to break the Euro into two with such an alliance.  The only alternative is to play an appearing-to-be-cooperative stalliing game [as they have been] until Spain agrees to seek a true bailout under the EFSF conditions.  The Fed can only provide swaps to keep dollar liquidity healthy, nothing more.

Tue, 06/05/2012 - 17:13 | Link to Comment NotApplicable
NotApplicable's picture

Legal relationships? LOL.

The answer to every impossibility you state is war, accompanied by further monetary destruction.

TINA told me so.

Tue, 06/05/2012 - 16:32 | Link to Comment world_debt_slave
world_debt_slave's picture

ha, ha, I love the evil ernie

Tue, 06/05/2012 - 16:34 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

Has the money printing worked?  Are the TBTF banks still alive?  Alright then.  Mission accomplished.  And if the TBTF banks need more, and they will, they'll get it immediately after they ask for it.  Immediately.

BTW I suspect that the FED will take my advice and not go around announcing this stuff anymore.  The announcements are decidedly UNhelpful. 

Tue, 06/05/2012 - 16:46 | Link to Comment Dr. Engali
Dr. Engali's picture

So why should we expect himto sit idly by and watch Europe destroy all his hard work?

Are you fucking kidding me?! How hard is it to hit ctl-p? A fucking bath salted zombie could do that.

Tue, 06/05/2012 - 16:50 | Link to Comment Dr. Crime
Dr. Crime's picture

I agree the post is silly. The more extreme and convoluted the metaphor the less likely it contains any sense of truth or maturity. Storytelling is cute but its function is to entertain not to inform.

Tue, 06/05/2012 - 17:00 | Link to Comment PR Guy
PR Guy's picture

Eat my face Draghi.

Tue, 06/05/2012 - 17:00 | Link to Comment Cangoroo
Cangoroo's picture

It is all internal, between central banks  and end result will be a few debtors and payables to keep money flow intact.

Tue, 06/05/2012 - 17:01 | Link to Comment RoadKill
RoadKill's picture

Let me propose a more retail friendly investment strategy – for those without prime brokerage accounts and access to all these esoteric options.

On the bear side look at SPXU, TZA, FAZ, and VXX.  I stopped using SMDD due to a lack of liquidity.  On the bull side look at UPRO, TNA and FAS.  I also have a portfolio of naturally long assets to hedge (stocks that got creamed during the bull market run up, some residential and commercial real estate and PE/VC investments).

At 700 I want to be balls to the wall long.  No shorts and lots of leverage.  I get the leverage by using 3x long ETFs, margin and by SELLING out of the money PUTs for cash.  At 1,000 I want to be long without leverage or shorts.  At 1,400 I want to be balls to the wall short, but I don’t use the same amount of leverage on the short side as on the long side.

The key is managing your net/gross position.  I had $3mm of 3x shorts at the end of April.  I had averaged into these as we ran up in Q1.  So yes I got hurt, but I ended up with a maximum short position as the market peaked.  As we have come down I have sold.  On Friday I got down to $1mm.  Today I bought a little back.  If we get to 1,200 I’ll probably get to $0.  If we go under 1,100 I’ll start buying 3x longs.  It’s really not that hard.

Basically buy when CNBC says the world is falling apart and the market is crashing.  Sell when CNBC is talking about 1,500 by the end of the year.

Tue, 06/05/2012 - 17:06 | Link to Comment honestann
honestann's picture

What's this?  A fed lover?  Sheesh!

Tue, 06/05/2012 - 17:09 | Link to Comment Rynak
Rynak's picture

Dear ZH staff: Would you please stop being a mainstream propaganda outlet?

Tue, 06/05/2012 - 17:16 | Link to Comment NotApplicable
NotApplicable's picture

There is value to be had in reading the script for the upcoming play, as you never know when you'll be called up on the stage.

Tue, 06/05/2012 - 17:37 | Link to Comment John Wilmot
John Wilmot's picture

Yep, he must have gotten the memo:

Dear compliant media prostitute (or useful idiot, as the case may be),

Tell all the sheep that the only path to salvation is for them to let us have more power...they eat that shit up."

Regards,

The Shepherds

Tue, 06/05/2012 - 17:10 | Link to Comment Spigot
Spigot's picture

Let me distill this down to on few simple words: print like fucking whores! The Europeans, unlike the Americans, can't just print like American whores. They will have to be bailed out by American whores who can print - print - print to their little hearts content. One day the European whores will finally, truly get the American whore religion and really start to show their stuff: print-print-print. THEN the world will be healed, peace will reign and death shall be no more.

... now, back to our regularly scheduled programming ...

Tue, 06/05/2012 - 17:13 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Asked on another thread by . . .someone:

Greece took 2-3 years to elevate Syriza and start playing hardball with creditors.  

Do we really think it will take Spain that long?

Tue, 06/05/2012 - 17:17 | Link to Comment NotApplicable
NotApplicable's picture

Depends on how the Basque fits into all of this.

Tue, 06/05/2012 - 17:15 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

Napalm = Dragi's breath

Tue, 06/05/2012 - 17:42 | Link to Comment New_Meat
New_Meat's picture

napalm, napalm, sticks like glue...

- Ned

Tue, 06/05/2012 - 17:16 | Link to Comment mammoth mo
mammoth mo's picture

If Central Banks do print - it will equal inflation.

If Central Banks don't print - it will equal deflation.

The problem is they have already printed so much the value of many of the current currencies is becoming neglible in the real world and neglible in the make believe world they have created.  The assets you can buy with the printed money drops daily in terms of real value.  Only by not printing can the Central Banks make all of the previous printing have any value. 

More printing devalues all current fixed incomes and assets.    The only people making money on the printing are the insiders who get it and then convert it to assets.  Assets that their purchase devalues.

The end game is to stop printing or devalue assests to zero - and which case printing will be stopped automatically.

 

 

Tue, 06/05/2012 - 17:20 | Link to Comment Cangoroo
Cangoroo's picture

It is clearly in the US interest to make the ECB print. When the markets recgonize that the Eurozone is a single market, USD will fall off the cliff. This whole so called EU debt crisis ist a no brainer. Debt and Credit can simply be matched and wiped off the ECB  BS. Then money supply  will be the decisive factor and guess what will happen.

Tue, 06/05/2012 - 17:26 | Link to Comment Cangoroo
Cangoroo's picture

The FED cannot wipe off anything off its BS. It is trapped, because there is nothing like target 2. Sounds good. Some economist would agree, I do not. Writing down debt and credit is not possible in the FED system. This is not too good for the prospects of total indebtment.

Tue, 06/05/2012 - 17:27 | Link to Comment mammoth mo
mammoth mo's picture

 

The real trick for traders is to play the upcoming down wave - and then make enough to buy the bottom at the real asset price.  This call will not be easy because of the unlimited amount of printing available.  Europe should have and would have died last fall/winter except for ECB intervention.  Intervention that ultimately has only postponed the problem.  Unfortunately these are not all in times.  More be nimble times.

 

Good luck trading everyone.  The kick the bully in his nuts play is to be as kind as you can to everyone as we go through this rough period.  The pain coming and the pain already here is bad enough.  Should we turn on each other it's like a double loss.  There is plenty of blame to go around - it is doubtful we will come face to face with the people who have brought this to our door.

Tue, 06/05/2012 - 17:42 | Link to Comment Cangoroo
Cangoroo's picture

I agree, but the ECB intervention was just in time to save it.  Currently especially the German government assumes that they can make a kind of profit and maybe so. But this a political issue. In terms of bringing the ECB BS back into shape, well it takes a minute or so. It is truly designed to enforce fiscal prudence with scaremongering.  And yes, Merkel is in the drivers seat, because the Bundesbank effectively contols Target2 and ELA. She can close the water tab e.g. on Spanish banks. But is a political dispute and does not correlate with solvency of the eurosystem.

Tue, 06/05/2012 - 17:36 | Link to Comment BLACK_DOG
BLACK_DOG's picture

BTW Do you think Strauss-Kahn has seen the "Established Men Sugar Daddy Dating" add yet?

Tue, 06/05/2012 - 17:39 | Link to Comment neidermeyer
neidermeyer's picture

Patti Smith Group ,, FREE MONEY!  http://www.youtube.com/watch?v=JSHf1svbQrA

Tue, 06/05/2012 - 17:40 | Link to Comment John Wilmot
John Wilmot's picture

Two things in Europe's future (neither of which involves dissolution of the EMU/EU):

1. Lots of inflation

2. Fiscal union (--> total integration, end of nation-states, etc)

Tue, 06/05/2012 - 17:51 | Link to Comment Cangoroo
Cangoroo's picture

I do not think so. I think there is liquidity in the system. Those current account issues need to be addressed, and Greece might be lost.Germany is not looking to get back Drachmas or Liras, that really stinks. Merkel is looking for Spain and other countries countries to start their career as a dishwasher and to work their butt off and to repay in goods and services. Not that good for the German exportation industry, but well one likes to drive a Ferrari let the Italiens build them.

Tue, 06/05/2012 - 18:20 | Link to Comment John Wilmot
John Wilmot's picture

"Greece might be lost"

...in the immortal words of Jim Morrison, no one here gets out alive.

I'll bet you a shiny turd that not one nation exits EMU or EU, ever.

To paraphrase other immortal words of Jim Morrison, the EU is a prison within a gaol within a socialist unfree banker-owned maelstrom.

No Exit, the nations get to spend eternity together in a little room asking "what the fuxck just happened to us?"

To be more direct, I understand the imbalances you're talking about, but my point is that no one in a position of power has any intention of fixing those or any of the countless other problems in Europe. They have one goal: create the USE (ironic acronym eh?), to hell with the consequences. Talkling abou how the eurocrats MUST do such and such to fix tyhe problem is like saying the Fed MUST stop inflating to prevent a catastrophe...who said anything about preventing a catastrophe? Those in power are not at a loss for means, it is a question of motives.

Wed, 06/06/2012 - 07:27 | Link to Comment andrewp111
andrewp111's picture

The Brits said the Euro was "a burning building with no exits" back in 1998. They were right.

Tue, 06/05/2012 - 20:14 | Link to Comment Sandmann
Sandmann's picture

Ferrari Made by FIAT

Tue, 06/05/2012 - 17:55 | Link to Comment koperniuk666
koperniuk666's picture

I am concerned when TD rolls out 'Clear and present danger"....

It was first cited as a reason to supress the First Amendment. Not something that we should be supporting here!

Having said that......... the circumstances almost certainly apply at this time.

 

Tue, 06/05/2012 - 18:07 | Link to Comment ebworthen
ebworthen's picture

Is that a muppet with a bazooka on the lead-in? 

Looks like Bert with a Bazooka and a hoodie.

Moral Hazard on!

Tue, 06/05/2012 - 18:55 | Link to Comment celticgold
celticgold's picture

i remember another (part) europe , a while back , that was looking for "strong leader" .  One of those finally stepped up , became the german chancellor , went on to "lead" europe , and the rest of the world , straight to hell.

Tue, 06/05/2012 - 20:13 | Link to Comment Sandmann
Sandmann's picture

Really ? He wasn't considered a srong leader but rather a malleable Coalition Partner for Von Papen. He had already been warned off by the Reichswehr Generals who themselves were preparing a coup d'etat in 1932. He didn't "finally" step up but had been a feature of German Politics for at least 10 years already. His party had been fighting street battles with the Communists. 

Tue, 06/05/2012 - 19:18 | Link to Comment CreativeDestructor
CreativeDestructor's picture

quite useless post like any strategist's post if you do not have triggers and timelines included. If you keep saying something day in and day out, one day, guss what, you will be right.

Tue, 06/05/2012 - 20:10 | Link to Comment Sandmann
Sandmann's picture

Jefferies' David Zervos, I love the smell of napalm in the morning   

David Zervos is managing director and chief market strategist at Jefferies & Co. Inc. He is known for his provocative market strategy and views; his current presentation, "Fed Reflation vs. European Detonation" has received notable attention. Zervos joined Jefferies in 2010 after spending 2009 as a visiting advisor in the Division of Monetary Affairs at the Board of Governors of the Federal Reserve System in Washington, D.C. Prior to the Fed, he held a variety of research, sales and trading positions in the private sector, most recently managing global macro portfolios for Brevan Howard and UBS O'Connor. He began his career as an economist at the Federal Reserve Board in the early 1990s. He received a B.Sc. from Washington University and an M.A. and Ph.D. in economics from the University of Rochester.

 

So when did he get time to be a Combat Soldier and gain this insight into Napalm ? Or is he just a clown trying to sound like a Vet ?

Tue, 06/05/2012 - 20:43 | Link to Comment JR
JR's picture

“The Bernanke Fed will not abandon the US recovery effort.” -- David Zervos

Bernanke, obviously, did not abandon his friends who own the NY Federal Reserve, but he spectacularly abandoned his countrymen, the American citizens. And the only recovery that we’ve seen has been the transfer of America’s growth potential to the pockets of the international banking cartel.

And to express hope that whatever has been happening will continue and that Bernanke will give to Europe what he’s given to the United States is an extremely important and frightening prospect.

The greed of the Fed cartel and its band of international financial rulers has led this van of world greed and international failed policies for 100 years – right to the edge of the world’s economic cliff. And Zervos wants to keep riding right over the cliff, pretending he’s on a battlefield (instead of collapsing earth) waving Bernanke’s “dual mandate” of “maximum employment and price stability” out the window while Bernanke once again aims his deadly QE bazooka at the very soul of American free enterprise.

The Fed is a creature of prey, for Heaven’s sake. All you have to do is to look at what it’s done. 

And its Zervos who's painted on the side of the van the Fed’s war motto: “We must stay prepared for the eventuality of aggressive action by our central banks – most importantly the Fed.”  That, for most of us, means take cover.

Obviously, this is planted support for printing.

And if that isn’t enough, our fearless rider laments that if only “the ECB had strong leaders that were willing to take some legal risk (break the law) with the mandate, we should be in a much safer place.” We?

It’s time to kill the Fed; or be killed.

Tue, 06/05/2012 - 22:50 | Link to Comment WaterWings
WaterWings's picture

And so it is. Such a sweet Declaration of War.

Kill, or be killed.

 

Wed, 06/06/2012 - 07:42 | Link to Comment andrewp111
andrewp111's picture

Bernanke does not care about the international bankers but he does want to stay in power, and Romney has already promised not to reappoint him. So I expect Bernanke to do whatever it takes to reelect Obama. QE4, QE5, a Reelection Refinance Plan, student loan forgiveness, every bazooka and howitzer Bernanke and Obama can come up with. I expect Obama to refinance all mortgage debtors at 0% with Bernanke's full backing, with the catch that no one gets the money until Obama is safely reelected.

 

Wed, 06/06/2012 - 01:47 | Link to Comment newengland
newengland's picture

Something's up after Queen's  Jubilee and London market opens soon. 

A public service announcement in red words  crossed CT TV screens ten minutes ago, saying more information would follow if there was an emergency.

Yes, the emergency system is common, but this is the first time in years that this sort of message has appeared, silencing the sound of TV,so the viewer would read the red message.

Just thought I'd mention it.

The unregulated otc derivative makers are getting desperate, imo.

Corner a beast, and it will come out fighting. Look out below...

Wed, 06/06/2012 - 05:58 | Link to Comment FunkyOldGeezer
FunkyOldGeezer's picture

1) The fact they (the FED) didn't print last year when everyone and his dog expected it, spoke volumes. $15 Trillion was enough debt and they knew they didn't have the 'money' to fix anything without the whole lousy game being exposed, once and for all. They couldn't print.

2) The US 'war' on Europe started more or less the same time as they didn't print last year. When is the US-centric bullshit making Europe out to be the only bad boys going to end?

3) Oil is the key, NOT Gold at this point. If the US economy cannot deal with $4.00 gas, what gives when it ineveitably reaches the $8-$10 range it already costs in Europe?

4) Which continent is being more realistic???????

 

Wed, 06/06/2012 - 06:19 | Link to Comment Satan
Satan's picture

Remember when they were talking about the Bazooka? Yeah, those were good times.

Wed, 06/06/2012 - 06:50 | Link to Comment R_J
R_J's picture

""Good luck trading""?

-Yup..."Glowing" GREEN Beach Towels from ZombieNanke...

Wed, 06/06/2012 - 10:02 | Link to Comment Grand Supercycle
Grand Supercycle's picture

SPX rally warning & USDX retracement warning now confirmed & good (counter trend) equity upside expected.

http://www.zerohedge.com/news/2012-12-24/market-analysis

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