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Bundesbank Pulls Cloud Nein From Under Hollande, Draghi

Tyler Durden's picture




 

Minutes ago French socialist president Hollande once again climbed on top of Cloud Nine, fully hopeful that Draghi's bluff would be enough:

  • HOLLANDE CITES `STRONG WORDS' BY ECB'S DRAGHI ON EURO
  • HOLLANDE SAYS ALL WILL BE DONE TO `DEFEND, PRESERVE' EURO

This led to a brief spike in the EURUSD until moments later, CNBC's Steve Liesman, by way of the Bundesbank, just converted Cloud Nine into Cloud Nein, which in turn was promptly pulled from under Hollande:

  • BUNDESBANK TELLS LIESMAN MONETARY POLICY SHOULD FOCUS SOLELY ON PRICE STABILITY, STATES NEED FISCAL INTERVENTION

This means the Bundesbank does not give its blessing to SMP reactivation, and does not all "all" to be done to defend the Euroe. And with that the German response to Draghi's bluff is complete, just as predicted. Check to Mario who is suddenly boxed in a very big corner.

The market response is immediate:

  • SPANISH 10-YEAR BONDS ERASE ADVANCE; LEAVES YIELD AT 6.62%.

And this latest headline is certainly not going to help:

  • GERMAN SAVINGS BANKS GROUP REJECTS BANK LICENSE FOR ESM

There goes the crutch that led the EURUSD rise last week on Ewald Nowotny's Wednesday rumor.

 

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Tue, 07/31/2012 - 09:07 | 2664680 101 years and c...
101 years and counting's picture

all will be done to preserve euro:  ask germany to leave so the ECB can print, print print.

Tue, 07/31/2012 - 09:20 | 2664723 GERxit
GERxit's picture

+100 if I could

Tue, 07/31/2012 - 09:23 | 2664739 bank guy in Brussels
bank guy in Brussels's picture

European leaders are having a grand time fooling the rest of the world, especially Americans ... They finally learned to copy the American 'two party' scam on a Europe-wide level

This 'conflict' between Draghi and the Germans, is like Romney and Obama pretending to be in conflict, in America's fake 'two-party system' owned by Wall Street

Draghi is expressing the medium-term view of what will happen, during possibly September - October ... the Germans are expressing the short-term view, push down the euro and keep German exports pumping, and keeping Germans happy.

In fact the Germans are in a political box as much as Draghi ... the Germans are constricted as to what they can say out loud, but they see the writing on the wall.

It is too late for Germany, too, and the German elite knows that. Euro-zone implosion means German bank implosion.

The German 'we are hard money' show, is just that, a show ... after a likely 'systemic crisis' episode in the next few weeks or months - Greek exiting the euro a good candidate, leading to a 'surprise' sudden near-collapse of the whole euro-zone banking system - Germans will 'oh so reluctantly' agree to print and inflate, to 'save Europe'. Already in the cards.

As Jim Sinclair said years ago: 'QE to infinity ... here, there and everywhere'

Tue, 07/31/2012 - 09:28 | 2664764 milanitaly
milanitaly's picture

+ 1000

Tue, 07/31/2012 - 09:55 | 2664851 El Oregonian
El Oregonian's picture

When you said Draghi had the cloud pulled from underneath him I envisioned the look on Wily Coyote's face when he realized the Roadrunner pulled the bottom from underneath him too.

Classic look- Just like Super Mario's facial expressions... Very classic indeed.

Tue, 07/31/2012 - 09:07 | 2664682 GMadScientist
GMadScientist's picture

Hollande c'est un idiot sans nul doute.

Tue, 07/31/2012 - 09:40 | 2664808 Pactyas
Pactyas's picture

sans aucun doute, mon vieux.

Tue, 07/31/2012 - 09:09 | 2664688 SheepDog-One
SheepDog-One's picture

WTF? Major European banks now directly address LIESman?? 

Tue, 07/31/2012 - 09:18 | 2664708 fuu
fuu's picture

WTF indeed.

Tue, 07/31/2012 - 09:18 | 2664709 Everybodys All ...
Everybodys All American's picture

+1

Tue, 07/31/2012 - 09:20 | 2664719 HelluvaEngineer
HelluvaEngineer's picture

I'm kinda surprised that Liesman didn't just get all bent out of shape and tell them that they have to print free moniez.

Tue, 07/31/2012 - 09:11 | 2664691 Jim in MN
Jim in MN's picture

 

You'll all be glad to know the conservation status of the Australian Black Swan:

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

''Least Concern"

 

No threat of extinction, or significant decline in population has been identified with this numerous and widespread bird

 

Lots more coming....

 

 

Tue, 07/31/2012 - 09:11 | 2664692 lizzy36
lizzy36's picture

Geithner and Obama spending "massive amounts of time on EZ". There will be no large state debt write-offs and no large bank failures. So even if both entites are insolvent, fucking Geithner has decided they are not.

Ironic that Buba is correct. Just because the US is pretending that monetary policy is a panacea, doesn't mean the ECB should follow suit (also if Geithner urges one solution over all others, one should know that solution is WRONG).

When world recouples with gravity the skid marks are going to go from here to the moon.

Tue, 07/31/2012 - 09:13 | 2664700 vertexa
Tue, 07/31/2012 - 09:18 | 2664707 bank guy in Brussels
bank guy in Brussels's picture

This was covered on ZeroHedge yesterday ... as one might well expect ...

http://www.zerohedge.com/news/eu-ombudsman-probe-mario-draghis-conflicts...

Tue, 07/31/2012 - 09:21 | 2664729 HelluvaEngineer
HelluvaEngineer's picture

Puleeze.  He could drink baby blood live on TV and nothing would be done about it.

Tue, 07/31/2012 - 09:18 | 2664710 DavidC
DavidC's picture

It's a shame there's bugger all retail left in the market now, this would have prompted more of a sell off than we'll probably get today (I wouldn't be surprised to see the market end UP on the day...sigh).

DavidC

Tue, 07/31/2012 - 09:22 | 2664736 HelluvaEngineer
HelluvaEngineer's picture

Oh, there are some real people in there.  They just have no incentive to sell, what with all the price fixing and such.  Why should they?

Tue, 07/31/2012 - 09:23 | 2664742 milanitaly
milanitaly's picture

Nein of Bundesbank will not kiill euro.

Mario Draghi will not save Euro.

Follow Mario Monti's tour. He is not bluffing.

Tue, 07/31/2012 - 11:06 | 2665100 Nussi34
Nussi34's picture

Can you start to name some of your people not Mario, please!

Tue, 07/31/2012 - 10:54 | 2664761 deez nutz
deez nutz's picture

"HOLLANDE CITES `STRONG WORDS' BY ECB'S DRAGHI ON EURO"

interpretation:  Hollande cites "strong, broken WIND by ECB DRAGHI"

Tue, 07/31/2012 - 09:29 | 2664768 loveyajimbo
loveyajimbo's picture

Hollande, Draghi, Obama... they all blow lies out of their asses and expect the sheep to think it is Chanel #5.

Tue, 07/31/2012 - 09:31 | 2664780 elwu
elwu's picture

The ESM doesn't need a bank licence at all to act like a bank. Maybe you guys should actually read the ESM contract, so you know hat you are blogging and discussing about?

Article 32, clause 9 of the ESM:

The ESM shall be exempted from any requirement to be authorised or licensed as a credit institution, investment services provider or other authorised licensed or regulated entity under the laws of each ESM Member.

Got it now?

Tue, 07/31/2012 - 09:32 | 2664787 BarryG
Tue, 07/31/2012 - 09:33 | 2664789 geno-econ
geno-econ's picture

In the end, the final determination will not be made by pronouncements by elected or appointed polititians ,or even direction of equities or bond interest rates.  It will be some insignificant bank in Austria, Serbia , Australia or Peoria that will intstigate a financial wave of reality that no one  will be able to stop. Ben will finally be speachless.

Tue, 07/31/2012 - 09:48 | 2664830 lolmao500
lolmao500's picture

And price stability ain't 2% inflation, it's 0% inflation. Something which all those ``economic PHD`` hacks should get through their thick heads.

Tue, 07/31/2012 - 10:24 | 2664971 XtraBullish
XtraBullish's picture

Tyler give it up - the Germans cannot afford to see the Euro crater - YET - they aren't short enough. This market is going WAY higher so you all had better cover.

Tue, 07/31/2012 - 11:09 | 2665108 Snakeeyes
Snakeeyes's picture

"The Swallow" say nein to bailout fund. Why should Gernmany bailout Greece/Spain's over 50% under 25 unemployment rate?

http://confoundedinterest.wordpress.com/2012/07/31/schauble-says-nein-to...

Tue, 07/31/2012 - 11:10 | 2665113 Lost Wages
Lost Wages's picture

Haha, the Cloud Nein pun made me laugh. ^_^

Tue, 07/31/2012 - 11:27 | 2665205 cnx
cnx's picture

But EUR/USD over 1.23, Italian yields below 6%: the market still believes Draghi will pull off the stunt he has promised?

Tue, 07/31/2012 - 12:11 | 2665281 mrfreeman
mrfreeman's picture

I am astonished how long this has draghied on for, you would think by now the market would have sold off to a more realistic price level.  There is no way Draghi can print with those pesky Germans constantly interfering.  And yet the market continues to hope.  I suppose it's because there really is no decent yield ANYWHERE, and so everyone may as well leave their money in stocks etc.  If they sell everything, they have no option but go into USD.  Sad state of affairs.

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