Bifurcated Euro Begins As AAA-Only 'Elite'-Bond Issuance Considered

Tyler Durden's picture

As the hopes of an IMF bazooka fades, Market News is reporting that the ever-ready-to-print-a-story European newspaper Die Welt says Germany and the other 5 AAA-rated nations of Europe are discussing jointly issuing 'Elite' bonds. We assume the borrowings could be used to fund the less-well-rated nations and avoid a true Euro-bond joint-and-several issuance which Merkel and other have been so opposed to. For now, it is clear that the 'Have's and the 'Have-Not's are becoming increasingly divided and this - much like our earlier discussion of the recap section of the EFSF draft - seems to be further from a fiscally united Europe and any inevitable endgame. We wonder what will happen when Austria gets downgraded? It certainly seems that the much-ridiculed ratings agencies are now playing an even more important role and we can only assume that the recent disappintments in the better-rated sovereign auctions were 'transient' and 'temporary'.

It is increasingly clear that Europe is bifurcating in many ways - High-grade and everyone else - and it appears the preparation is beginning.


From Market News:


FRANKFURT (MNI) – The German government and five other Eurozone member states with a triple A credit rating are considering issuing bonds together, German daily Die Welt reported Monday, citing unnamed highly placed EU officials.


The paper said that the money raised by the bonds would finance the debts not only of the six AAA-rated countries — Germany, France, Finland, the Netherlands, Luxembourg and Austria — but also help provide financial assistance, under strict conditions, for Italy and Spain.


The goal of the new bonds would be to stabilize the situation of the AAA countries and “erect a credible firewall that calms the financial markets,” the paper said.


The German Finance Agency would play a major role in the sale of the bonds, which would carry an interest rate of 2% to 2.5%, the paper said.


Since the bonds would not be “Eurobonds” jointly issued by all 17 Eurozone member states, they are being called “Elite bonds” or “Triple A bonds” for working purposes, Die Welt reported.



One more thought...Is Germany learning from its Chinese trade partners and looking to take on the vendor-financing mercantilist position among its European partners - if so, this would hardly help the imbalances that are among the causes of the problems we now stand in.

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txsilverbug's picture

A bond we can all have faith in.  Who's buying?

Misean's picture

I'm an atheist. I will, however, buy some of their gold for some freshly printed FRN's.

paarsons's picture

Say what you will.

But you will see a Euro-bond soon.

These bankers have a lot of power.

What God wants, God gets.

dwdollar's picture

Rumor has it, the Greys are going to lend a hundred trillion Alpha Centauri Credits backed by element 115 using the Earth's DNA as genetic collateral. The mother-ship should warp in and beam it down anytime now.

delacroix's picture

but, they want all the gold

Manthong's picture

Sarkozy to provide collateral and consummate the deal..

TruthInSunshine's picture

We interrupt your regularly scheduled programming to bring you the following 'It's On Like Donkey Kong' breaking news:

11-28 1:45: WSJ writes: "Inner Workings of Market Readied for Euro Breakup"

HD's picture

It's true...but only after after a decade or two of in depth anal probes - you know, to check our credit worthiness.

disabledvet's picture

Indeed he does. And the "man behind the curtain" is many things, but God is not one of them. This is clearly a perpetuation of the mercantilist position to the extent that that's even possible. "Taking your toys and going home" isn't that simple however. There are "geo-political issues" which i might add probably caused this mess in the first place. The first one that stands out is "how does not solving the mess solve the mess?" The metric is brutally simple: in the USA the politicians bailed out Wall Street to their permanent political detriment. Again we find ourselves asking "and yet Germany can't find a way to stop throwing Greece under the bus"? (and stop phucking with my computer tom keene--as well as that other stuff you keep doing, too. one good night sleep. how 'bout we start with that?)

Bokkenrijder's picture

I'm definitely not happy about it! These f*cking Eurobonds will be forced down our throats, just like the rest of the EUSSR.

If one looks at the history of the EU, then you see that everything always started off in a small number of countries (the BeNeLux) doing something sensible and it then morphs into the European Economic Community (with more corrupt members) and then into the EU.

The next move is obviously a real EUSSR (a fiscal and political union), and the jumping board will be the "AAA Eurobonds" of the stronger core countries, just like the BeNeLux formed the basis of the current mess we're in.

That's how the (ex?) communist Barroso wants to re-shape the European political landscape in a fashion that would make Fieldmarshal Tito blush.

In the mean time, I'll just continue buying Gold (holkding up it's value quite nicely in Euro's!) so I can f*ck off out of the EUSSR when the real shit will hit the fan.

The Big Ching-aso's picture


 When they revert to their native currency, printed in German over Beethoven's head.............


"In God We Trust.    Everyone else pay in Deutsche Marks."

Uncle Sugar's picture

OFF TOPIC:  When the Fed buys MBS from banks at par, because the banks can't swallow the losses, what happens to the losses that inevitably happen on the Fed's balance sheet?  Do they just tell the Treasury they will print the difference up?

Dr. No's picture

lol!  Why would the FED, who lists their gold at $42.50/oz, list MBS at anything less than what they choose to value them at?  Also they dont answer to the treasurey, its the other way around.

cranky-old-geezer's picture



They don't have to tell Timmy anything ...except "fuck off" perhaps.

Fed doesn't have to report to anyone, so they can carry worthless assets on their books at any value they wish.  It's called mark-to-skittle-shitting-unicorn-myth accounting.

But for the record Ben did tell Timmy IF he decides to mark some of the worthless crap on his Fed balance sheet to something anywhere aprroaching reality resulting in a loss, Timmy gets to eat it ...meaning taxpayers get to eat it ...which really doesn't mean anything since none of the $15,000 billion national debt will ever be paid off, rolled over yes, paid off no. 


TruthInSunshine's picture

Very nice.

I like both the substance and tone of your response.


The Monkey's picture

Here's a message for all politicians, sell-side analysts, permabulls, and quite unfortunately, general citizens: you are fucked on the one-way liquidation street.

philipat's picture

When even Germany has problems getting its own bonds away, who indeed is going to buy? WHy doesn't Germany just go it alone and charge, say, 3% spread to others? Mercantilist financier? Why not. I can't see that the US would do any favours to its partners in NAFTA under similar circumstances and 3% spread is far better than they can get alone.

disabledvet's picture

because Spain is too big to fail. Of course "failing Italy" is beyond sinful as well...but "why should Wall Street ever be interested in that God thing?" Hmmm. Let me see..."he built every City in Europe" seems like a good start. How 'bout the art work you have hanging on your wall? Or the colors of the cloth you wear to work? Or the music that "draws you in"? Or the....

TruthInSunshine's picture

Bernank actually stole 7.7 trillion in U.S. taxpayer milk money, and loaned it the banks for essentially nothing in interest, and the 13 billion is the best the incompetent FUBAR banks could do in terms of profit on that free money.

Hell, I could've easily returned 10 times that spread, and I'm not doing "God's work," and therefore not blessed as the Vampire Squid is.

disabledvet's picture

did their "stocks" get a "pop" on this news? No? Gee..."perhaps if they'd disclosed it properly." Oh, well. Welcome to Strangelovian Finance. How did the line go "we've built a bomb that will destroy the world as the ultimate deterrent. But we didn't tell anybody about it."...."YOU PHUCKING IDIOTS!" cue to Patsy Cline: "we'll meet again, don't know where! don't know when!" Apparently Wall Street didn't get the memo.

The Big Ching-aso's picture



I think America should merge with Europe.   Then we can have one currency called,  The Ameuro.   That way both our currencies will finally be fucked together in a more perfect union.

eureka's picture

It's cool - Everyone will buy EU Elite bonds - just like everyone buys US Treasury Bonds - -wow - isn't it cool that the Europeans are now learning from the US how to print fiat to extend and pretend and pump stocks up so that the world doesn't collapse from sticking it to the banksters... Timmie Boy is in extacy at the prospect.

Misean's picture

AAA, like youth, is fleeting.

UP Forester's picture

That's what I was thinking.  Weren't mortgage CDO's AAA?

ThatThatcher's picture

So were Bear Stearns and Lehmann's.........

Unprepared's picture

They meant E-light (Europe Light)

Terminus C's picture

I wonder what language they have in their constitutions that would allow for extranational financial integration of this sort...  They follow the rule of their own constitutions right? ...Right?

Misean's picture

Constimipations are like bonds, stocks and fiat...paper promises.

txsilverbug's picture

Not like they will actually create it, these are just news stories designed to suck more money into this financial abyss known as "the euro".


Politicians and bankers talking out their asses, again.

XenoFrog's picture

phew... disaster averted.

Cult_of_Reason's picture

Reports Of IMF Package For Italy Not Credible - International Financial Officials

Boilermaker's picture


We've moved on to 'Elite Bonds' to keep the facade from crumbling.

txsilverbug's picture

Man that got shot down fast.  They need to have another meeting and get on the same page again.


Here are my guesses as to how the meetings play out behind closed doors.


Merkel: Umm, no printing!  Remember the Weimar government?
Sarkozy: Netanyahu is a liar!

Geithner: Need some money?  We can print it!

Merkel: No printing!

Obama:  Can someone help my with my capri sun?  I cant get the straw in.

Bernanke: Jackson Hole is cold this time of the year.

Monti:  here is what we will do.  We will tell them that the IMF is going to bail Italy out and this will inject the confidence needed into the bonds market and by the time they realize they have been duped, we will of kicked the can down the road.

Obama: Crap, I just got capri sun all over my new suit! This is the republicans fault!  Had they enacted my bill to replace these plastic capri sun straws with enviromentally friendly ones, I would have a clean suit!

Bernanke:  FOLKS, back to the economic issues. We have to end this meeting, I have to catch a helicopter!  The solution is easy people, there isn't one!  We just keep doing what we have been doing for the last century. Lie to everyone!

Obama:  Oh, thats easy.  Look, it got me elected! 

Monti:  OK, so I'm getting bailed out but I'm not really right?  Just one big lie to keep the machine running..

Bernanke: You catch on fast!

Monti: I am a banker you know.

Sarkozy: Netanyahu is a liar!

Obama: It's not my fault, I'll blame congress for not passing more printing measures!





knukles's picture


Jackson's hole is cold this time of year.

rumblefish's picture

all the pomp and circumstance...let em fail and we can move on.

Mike2756's picture

Luxembourg? They have the gdp of a gnat.

i-dog's picture

Heeeyyy ... It's equivalent to that of South Dakota. That should be enough to bail out France, Italy and Spain, right? Right? Riiiiiight.

ThatThatcher's picture

Who cares about scale. It's all about GDP per cap nowadays. Just jump on the triple-A bandwagon.

Temporalist's picture

So it's a bailout for the now isn't everyone running out of buckets?

americanspirit's picture

My God - somebody turned on the lights. The cockroaches are scrambling for the exits. Get the Raid!

Boilermaker's picture

For fuck sake...just STOP this bullshit already.  Seriously....every day is some new magic potion?  Every day?!

BandGap's picture

Hmm, wonder what happens when a situation appears untenable between the "elites" and the "not so elites"? Eat the debt, or else?

Who would have ever thought the death spiral would be a slow motion train wreck!


This is the slowest motion trainwreck in the history of slow motion trainwrecks.