Art Cashin On The World Running Out Of Ideas To Bail Out Itself

Tyler Durden's picture


A big reason for the dour mood overcast on the market this morning is the failure of G-20 to resolve latent funding issues, with the IMF demanding more money from Germany for a global firewall, and Germany demanding more money from everyone else. A way to summarize events is that in lieu of any credible collateral left (the bulk of it has and will be pledged with the ECB in its discount window, aka LTRO operations, to keep Italian bonds bid and thus perpetuate the fallacy that things are under control), the world is now running out of ideas how to even kick the can down the road. Which is not a good sign as much kicking remains with tens of trillions in debt rollover coming up in the next few years. Below is Art Cashin's summary of this weekend's disappointing G-20 weekend retreat in Cabo san Lucas, which enjoyed the scenery but did nothing to easy the confusion over who pays for what in the next few weeks.

From UBS Financial Services

The Weekend G20 Meeting - I think the best and most succinct assessment of the session may have come from UBS’s London-based sage, Paul Donovan. He simply said:

The G20 was its normal complete waste of time and airfares. The group agreed to do nothing about anything, but did offer up some nice platitudes about how well the world economy seemed to be doing. Many might believe that markets could work that out for themselves. The LTRO on Wednesday looks to get a lot of attention from markets. More tomorrow.

The wasted event, nonetheless, is seen as a potential setback to the cooperation needed to keep the bailouts moving and to keep the markets reassured. Here’s a take from David Powell over at Bloomberg:

The resistance of G-20 leaders at their summit in Mexico to increase the funds of the IMF available to assist euro-area countries reduces the feasibility of the second Greek bailout package.


Those policy makers have rebuffed European demands for additional funds. In their communiqué, they wrote, “At Cannes, our leaders asked us to review the adequacy of IMF resources...Euro area countries will reassess the strength of their support facilities in March. This will provide an essential input in our ongoing consideration to mobilize resources to the IMF.”


They signaled Europe is unlikely to receive special treatment, even if the organization musters new resources. The finance ministers and central bank governors stated, “These resources will be available for the whole membership of the IMF, and not earmarked for any particular region.”

That sense of potentially fraying cooperation has European markets slipping a bit this morning and weighing on the U.S. futures. Wasted airfare and wasted opportunity.

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Mon, 02/27/2012 - 10:18 | 2200287 maxmad
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Art "Cashin in on the failed bailouts!"

Mon, 02/27/2012 - 10:39 | 2200337 Chief KnocAHoma
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Too many cans... too few feet.

Mon, 02/27/2012 - 10:54 | 2200376 King_of_simpletons
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Household debt blackhole is back after a brief and mysterious hiatus:

Mon, 02/27/2012 - 13:36 | 2200922 donsluck
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Just following the leaders, if they borrow 'til they bust, why shouldn't the little guy?

Mon, 02/27/2012 - 17:48 | 2201812 Totentänzerlied
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Those dinky little inkjet printers are no match against a fleet of well-greased Heidelbergers.

Mon, 02/27/2012 - 11:05 | 2200407 CPL
CPL's picture

That would make a good bumper sticker.

Mon, 02/27/2012 - 12:18 | 2200629 The Big Ching-aso
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"Let's pretend to extend while we pretend to kick the can down the road.  It's time we face reality and not retreat."

G-20 Retreat, Cabo San Lucas


Mon, 02/27/2012 - 10:18 | 2200288 King_of_simpletons
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So is this the 'shit meet fan' moment ?

Mon, 02/27/2012 - 10:20 | 2200292 maxmad
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Yes... Only a "intergalactic planet federation will bail out Earth" will have any impact now!

Mon, 02/27/2012 - 10:35 | 2200327 TheEmperor
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Perhaps I will request Nute Gunray of the Trade Federation to provide debt guarantees

Mon, 02/27/2012 - 10:39 | 2200334 Arvo Particleboard
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Call Krugman. He might know of one.

Mon, 02/27/2012 - 11:14 | 2200433 francis_sawyer
francis_sawyer's picture

You bet he does...

Mother fucking space nazis from the dark side of the moon bitchez!

Krugman had it right all along...

Mon, 02/27/2012 - 10:47 | 2200305 bdc63
bdc63's picture

"So, is this the 'shit meets fan' moment?" -- King of Simpletons

Not yet King, but we can see it from here ...

Mon, 02/27/2012 - 10:57 | 2200384 BobPaulson
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The shit has been flowing continuously into the fan for a while now in a steady stream. I actually think it's not a fan but a turbine that converts the shit flow into angular momentum on a shaft. That keeps the system of news releases going around in circles while we all get the shaft.

Mon, 02/27/2012 - 11:26 | 2200470 resurger
resurger's picture

Long Shit Fans

Mon, 02/27/2012 - 12:19 | 2200632 Jay Gould Esq.
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Doesn't Dyson make one of those ? High-velocity effluent circulation.

Mon, 02/27/2012 - 11:05 | 2200408 CPL
CPL's picture

Not really, they make the rules to the game even if the math behind it is suspect.

Mon, 02/27/2012 - 10:21 | 2200293 RagnarDanneskjold
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And forget about China helping out.

Chinese real estate market on the verge of explosive price declines

Mon, 02/27/2012 - 10:22 | 2200294 bdc63
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No matter what happened at the G20, make no mistake about it -- if there is any contagion from this Euro mess into US banks, the FED and Treasury will be there with both guns blazing ...

Mon, 02/27/2012 - 10:27 | 2200302 Vergeltung
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maybe so, but what vehicle would they use for such an intervention?

Mon, 02/27/2012 - 10:35 | 2200323 bdc63
bdc63's picture

They'll create some new 'can-kicking' vehicle just like they have every other time one of their precious banks has gotten into some trouble.  It's name will have to be even more clever than "TARP" though ... maybe they could make "GOUGE" or "ABYSS" work ... and hyperinflation will certainly be the outcome ...

But THEY WILL NOT STAND BY AND WATCH as US banks fail.  We entered "whatever it takes" territory a LONG time ago, and they surely are not going to stop now.

Mon, 02/27/2012 - 10:48 | 2200351 Chief KnocAHoma
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+1 - You are correct, but eventually they too (FED) will run out of options. I fear there are but two courses we can take from here.

1 - A World Wide Jubilee - all debts forgiven by every one. If you own it, have possesion and have title to it, you get to keep it. If someone owes you, it is forgiven. If you owe someone else, it is forgiven. (Forgive us our debts as we forgive our debtors.) This would also include pensions, 401Ks, social security, welfare, medicare and medicaid.

2 - A massive, global World War. Millions killed, countries destroyed.


Mon, 02/27/2012 - 10:52 | 2200368 bdc63
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I am not saying that this doen't end badly - personally I think we're (the US) going to end up looking like a third world country.  What I'm saying is that I've been hearing for 4 years that "this is it - this time its over" ... and they ALWAYS have one more card up their sleeve to prolong it, and ultimately, make it even worse.

This is NOT the end ... they still have more cards to play ..."Markets can stay irrational longer than you can stay solvent" ...

Mon, 02/27/2012 - 13:07 | 2200812 Jerry Maguire
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In the US a jubilee would be done by constitutional amendment:

If it was part of a popular uprising, there is nothing the banksters could do to stop it.  I keep thinking the occupy movement might focus on that.  Could work.  There is strength in being "99%", because a super-majority is enough for constitutional change.

Not holding my breath, though. 

Mon, 02/27/2012 - 10:22 | 2200295 duo
duo's picture

good to see correct grammar.  If it was the WSJ, they would say "world running out of ideas to bail itself out".

Mon, 02/27/2012 - 10:53 | 2200365 Arvo Particleboard
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Given the WSJ's position as propaganda adjunct in a third-world autocracy, can that error be called a banana split infinitive?

Mon, 02/27/2012 - 10:23 | 2200296 Sandy15
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They ran out of money 3 years ago, that's why they have been printing.......  Why is NOW any different other than they need an excuse for the market to sell off?  Central Bankers know they are creating inflation around the World, when people start getting agry over it, they have to hault to liquidity pump into the markets..........  I'm just sayin'

Mon, 02/27/2012 - 10:31 | 2200309 Zero Govt
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"The G20 was its normal complete waste of time and airfares."

Fuking windbags ..every G5/G20 is unremitting pompous worthless crap

Mon, 02/27/2012 - 10:48 | 2200359 Blammo
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C'mon Zero There was a photo op wasn't there?

Mon, 02/27/2012 - 10:30 | 2200314 Shizzmoney
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Somewhere, Hugh Hendry is smiling.

Mon, 02/27/2012 - 10:31 | 2200317 Jerry Maguire
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They should talk to me.  I know exactly what to do:

It's lawyers, guns and money time, just like Warren Zevon said.  I'm the lawyer.  They should call me, but they won't.


Mon, 02/27/2012 - 10:34 | 2200324 Stoploss
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So, how long does it take for a 3T enonomy to figure out it cant bailout a 17T economy?

Mon, 02/27/2012 - 10:34 | 2200325 Moneyswirth
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It's like a hybrid game of musical chairs/hot potato.   Last one holding the bag and falls flat on his ass, um...loses.



Mon, 02/27/2012 - 10:39 | 2200336 mayhem_korner
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Yes but there are fifty people standing and no more chairs. 

Thus, the Ponzi takes on the economists' mantra: "imagine a chair..."

Mon, 02/27/2012 - 10:47 | 2200357 Jerry Maguire
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I made the exact same musical chairs analogy over 4 years ago:

It hasn't paid to be so far ahead of the curve, though.

Now I've had to instruct the Brits on their own idea of a "liquidity trap":

See all the comments for details.

Mon, 02/27/2012 - 11:01 | 2200397 Moneyswirth
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Amusing how these issues are still with us no?

Mon, 02/27/2012 - 10:35 | 2200326 slaughterer
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When does Japan become a problem again?  Oh, pretty soon it seems. 

Mon, 02/27/2012 - 10:39 | 2200338 mayhem_korner
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I thought we were getting 'glowing' reports from Japan.

(I know, it's bad, do what you must)

Mon, 02/27/2012 - 10:36 | 2200328 pazmaker
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I wonder if the Sinaloa Cartel provided security?

Mon, 02/27/2012 - 10:36 | 2200330 Stoploss
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Guess what meskins, ur next..

Mon, 02/27/2012 - 10:42 | 2200343 NEOSERF
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Get this straight...those that can print (ECB, Fed, BOJ, BOE) WILL print no matter how bad it gets...the US has no intention of ever paying $15T so it is a small leap of logic to say "let's print another $2T and give it to the EU" to keep this thing from falling off the has happened three times in the past and will happen later this spring with the IMF getting their money and the LTRO being rumored to be larger and one cares that those providing the money are insolvent...If Greece can go on for 2 years, just guess how long Spain or Italy can go on for...

Mon, 02/27/2012 - 11:15 | 2200438 bdc63
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yep - that's exactly how I see it playing out as well.

Mon, 02/27/2012 - 10:55 | 2200378 Coffin Dodger
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What if?...

The Europeans now openly refer to the current financial system as the 'Anglo-Saxon' system. This system, in place for hundreds of years, was first imposed by the English during their colonial phase, then bolstered by US might since the turn of the last century. This system has served it's masters well. Until 2008.

Unfortunately for the US and UK, the majority of the rest of the world doesn't want to play by these rules any more. Europe is busily distancing itself from the UK (the UK PM was sent home late last year with no deal done to save The City) - and over the course of this year many current EU heads of state are to be replaced with new, untarnished by the old system, leaders (e.g. Hollande in France will win the election -  and he is, rather than anti-European as painted in the UK/US media, extremely pro-European. Our banksters, and by extension, media, are terrified of him winning).

The Europeans have a plan, you see.

They don't want to pay tribute in $ to the current financial system any more. And they know it's all broken.

We may all be in for a major dislocation soon.

Mon, 02/27/2012 - 18:00 | 2201868 Totentänzerlied
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The architect of the EU was French.

Just more blame-shifting.

Mon, 02/27/2012 - 11:00 | 2200388 cranky-old-geezer
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America & EU are living on borrowed money now.

There's just not enough economic activity generating enough tax revenue to keep these bloated free-spending governments going. 

Ditto for banks.  Not enough revenue to keep bloated banks going, plus balance sheets riddled with collapsing asset values.

Now we've entered the 2nd phase where central banks have printed and loaned all the currency they can short of collapsing their currencies.   If Bernanke does QE3 (or something like it under another name) it might just end USD's world reserve currency status.  If ECB does another $500 billion LTRO it might just collapse the Euro.

Point is, nobody knows for sure.  Nobody knows when confidence in USD and / or EUR might suddenly collapse.

There's no good end to this.  Failure and collapse under enormous debt are guaranteed.  It's just a matter of when.

Mon, 02/27/2012 - 11:29 | 2200486 BeerBrewer09
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damn, you changed your avatar.

love your concise posts.

Mon, 02/27/2012 - 12:37 | 2200674 BeerBrewer09
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Sweet, thanks.

Mon, 02/27/2012 - 11:04 | 2200406 eddiebe
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Bankster to Piig g-pig man: Ok. asshole I'll print you up some nice new Euro notes, but I want your gold.

Piig government pig man: Yes sir, right away sir, I'll put my best highly paid piggy lackeys on selling the sheeple on that idea.

Mon, 02/27/2012 - 11:06 | 2200409 zerozulu
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world is not out of ideas . TPTB like this world in chaos because it pays. Here are two simple things for a start.

Jubilee debt its 0's and 1's anyway.
Hang top 100 or so to the street lamp..

Mon, 02/27/2012 - 11:15 | 2200434 cranky-old-geezer
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Sorry, no jubilee, bankers will ride this ponzi right over the cliff.

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