Carpe Diem, Quam Minimum Credula Postero

Tyler Durden's picture


Via Mark J. Grant, author of Out of the Box,

“Seize the day, put no trust in tomorrow.”
Tomorrow, September 4, 2012 will be a defining moment. Mr. Draghi will release to the European Central Banks his plan to save the Continent. The plan will get leaked, no doubt, and the consternation will begin throughout Europe. Today the German Economy Minister went public and announced that he supports Weidmann, the head of the German Central Bank, in his opposition to the European Central Bank's plans to buy debt of Eurozone countries with high borrowing costs, saying that they could not replace economic reforms. I think we may all read this as Frau Merkel’s position as well as Herr Roesler does not speak without approval. The stage is now set for battle.
“A good soldier in an enemy's country should everywhere and at all times be on the alert. It has been one of the rules of my life, and if I have lived to wear grey hairs it is because I have observed it.”
                  -Sir Arthur Conan Doyle, The Adventures of Gerard
Spain wants the ECB to buy their debt without limit. France, Greece, Portugal, Italy and Cypress are lined up with Spain. The “have nots” are demanding divine intervention; the “haves” are not willing to tithe or to provide the necessary “indulgence” to send Madrid into Heaven. It is not the Barbarians but Martin Luther at the gate and I expect rancor and the spitting of Hell-fire. The Draghi plan, whatever it is going to be, will cause a very serious division of the faithful in Europe and I expect quite a fight. Spain and perhaps Italy are waiting on the plan before lining up for hand-outs and the trouble in Europe keeps escalating. Over the weekend the largest mortgage lender in France had to be bailed out and I expect the cost to be between $40-50 billion. In Spain Bankia had to be rescued and besides the initial payment of $5-6 billion you may expect a $30-40 billion injection required. In Italy the oldest bank in the world, Monte Paschi, turned to the nation to get bailed out in the last few days. The events may be isolated but a pattern is beginning to develop and the amount of money required will send shell-shocks through the national budgets of a number of countries in Europe. 
“Once more unto the breach, dear friends, once more...”
                      -William Shakespeare, Henry V
The Battle Of Frankfurt
Tomorrow the Battle of Frankfurt begins. Make no mistake in your thinking as America ends its holiday weekend; it will be a battle and there will be bodies littering the field of engagement. Spain and the rest have aims, plans, schemes if not hopes and ambitions in direct opposition to Germany and her side. The outcomes prayed for are a demand for money and a resistance to those demands.  The pleas of Spain are about to be answered; first from the ECB and then from Germany’s acceptance or rejection of the Draghi plan. The “Game of Muddle” will be ended and real answers to real insistences will be given. Spain has demanded money from the ECB to lower its cost of funding, money from the EU for their banks, no conditions for the receipt of either and they are forcing the issue of what it actually means to be part of the European Union. It all comes down to this; money and how much of it and under what circumstances and whether the nations with capital are willing to hand it to their neighbors and watch their credit ratings, their own cost of funding, their standards of living decline to a mean for all of Europe. It will be war; just not one fought with tanks and rifles.
Tomorrow it begins.

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Mon, 09/03/2012 - 09:44 | 2757498 HardAssets
HardAssets's picture

For the Spanish people - - - - (not your politicians or the banksters)

refer to Iceland

For the German people - - - -(not your politicians or the banksters)

remember that you originally wanted to keep the Mark

Mon, 09/03/2012 - 09:55 | 2757532 CrashisOptimistic
CrashisOptimistic's picture

blah blah blah

Spanish 10 year just re-hit 6.9%

Mon, 09/03/2012 - 10:02 | 2757555 Dr. Engali
Dr. Engali's picture

Now that's progress.

Mon, 09/03/2012 - 11:21 | 2757708 Race Car Driver
Race Car Driver's picture

... because this time - oh, this time! - it'll be different!

Mon, 09/03/2012 - 10:10 | 2757580 jekyll island
jekyll island's picture

Yawn. Haven't we already covered this? Politicians will print until currency collapses. What other option do they have? Admit they are wrong, take the pain and default and start over? They know they will be kicked out of office or hung from a tree, so they will stay the course until the economy collapses. Here's how it will end: Currency collapses, politicians shocked, absolutely shocked. Who will they blame? Why, the central planners of course. What will they do? Let the central banks bear the brunt of the blame and dissolve them, to be replaced by a new central bank run by technocrats who pledge to get it right this time. Who will own the new CB? Meet the new boss, same as the old boss.

Mon, 09/03/2012 - 10:59 | 2757669 CrashisOptimistic
CrashisOptimistic's picture

The problem with your scenario is politicians don't print.  

Central bank boards are not elected.  They aren't politicians.  They never face an electorate.

And in the case of the Fed and ECB, the issue is not printing.  It's who you're printing for.  The Fed will buy California bonds?  One thinks not.  The ECB will buy Spain bonds?  Maybe not.

In the end, the only thing that stops it is oil.  It's the only thing that isn't enshrouded in the bullshit that is economics.  Oil's BTUs existed before money.  When oil's BTUs get scarce, so does life, regardless of money.

Mon, 09/03/2012 - 09:58 | 2757540 Manthong
Manthong's picture

Carpe Diem, Quam Minimum Credula Gubernatio

Mon, 09/03/2012 - 19:28 | 2758838 earleflorida
earleflorida's picture

This, 'Tabula`Rasa dish' sliced thin... served on a toasted loaf of sinecure sour'd`dough, will surely shipwreck many a vessel, * 'too which only one port is accessible when no wind is favorable'; whilst the buzzards swarm the bay... echoing humorously **'all things to all men', as sure as twilight cast it's forlorn myriad shades of grey, dulling the darkest crescendo's of reality... and yet?  

* Seneca    ** Shakespeare  [improvised]   

Mon, 09/03/2012 - 10:47 | 2757650 JohnKozac
JohnKozac's picture

aka, "Spain's bankers want unlimited Bonuses without restrictions or conditions."

Mon, 09/03/2012 - 09:43 | 2757501 AvoidingTaxation
AvoidingTaxation's picture

Gold bitchez!

Mon, 09/03/2012 - 09:43 | 2757503 oogs66
oogs66's picture

Whatever the opposite of rose coloured glasses are, they must be worn here. Selective headlines

Mon, 09/03/2012 - 09:44 | 2757505 ZeroSpread
ZeroSpread's picture

Bunga, bunga..!

Mon, 09/03/2012 - 09:44 | 2757507 jonjon831983
jonjon831983's picture

Between a rock and a hard place.  Damned if you do, damned if you don't.

Phyrric Victory.

etc etc.

Will be waiting in anticipation.

Mon, 09/03/2012 - 09:45 | 2757510 Vet4RonPaul
Vet4RonPaul's picture

Me thinks you assign too much power to the national politicians; it is the bankers behind them in the shadows that pull the strings and they will not waste their pawns needlessly.  The pawns will be instructed to comprimise with each other and they will damn sure do it.  The least needed pawn - like Greece - will be removed from the board.  The politicians will definately be instructed to kick the can and they will be told how far to kick it; and they will do it.  It's the least expensive option for the bankers; that's why.  

Ron Paul and Nigel Farage for EU/US pres/vice pres.

Mon, 09/03/2012 - 09:47 | 2757513 LawsofPhysics
LawsofPhysics's picture

Indeed, good post.  Build wealth in the real value of physical assets of real wealth that you can defend.  This should include trusted family, employees, friends and neighbors.  Chance always favors the prepared and possession is the fucking law when the moral hazard is left unchecked.

Mon, 09/03/2012 - 09:47 | 2757515 Boilermaker
Boilermaker's picture

Yea, they are actually just going to kick the can down the road again.

But, that was some serous edge-of-your-seat dramatic writing.

Mon, 09/03/2012 - 09:49 | 2757519 Neezer
Neezer's picture

"Are you not entertained? Is this not why you were here?"


Mon, 09/03/2012 - 09:49 | 2757520 Martial
Martial's picture

" It will be war; just not one fought with tanks and rifles."

It eventually will be...if you believe history repeats itself and all that good stuff.

Mon, 09/03/2012 - 09:55 | 2757528 CrashisOptimistic
CrashisOptimistic's picture

Banks burn Brent priced oil.  Can't afford a non nuclear war.  Throwing a few missiles with nuclear warheads, otoh, requires no oil.

Mon, 09/03/2012 - 10:03 | 2757558 LawsofPhysics
LawsofPhysics's picture

Bullshit, you still need to do the clean-up, unless you are really stupid enough to think you can get away from fallout.

Mon, 09/03/2012 - 09:50 | 2757522 Atomizer
Atomizer's picture

Happy Labor Day ZH members!

Mon, 09/03/2012 - 11:27 | 2757718 HardAssets
HardAssets's picture

Thanks !  Gonna have some BBQ on this last (kinda) day of summer.

Mon, 09/03/2012 - 09:55 | 2757533 Dr. Engali
Dr. Engali's picture

If these Piig countries don't start following a different path and say fuck you to the bankers they are going to have a much bigger problem with all these unemployed youths running the streets. Pretty soon they are going to get restless.

Mon, 09/03/2012 - 10:10 | 2757579 Mark Wilson
Mon, 09/03/2012 - 10:12 | 2757585 Gordon Freeman
Gordon Freeman's picture

The thought of hordes of those pampered metrosexuals running wild is ridiculous...

Mon, 09/03/2012 - 11:29 | 2757721 HardAssets
HardAssets's picture

Then instead, have thoughts of hordes of Girls Gone Wild running wild

Mon, 09/03/2012 - 09:56 | 2757534 FMR Bankster
FMR Bankster's picture

Look for the usual kick the can down the road solution. ECB will announce they will buy bonds of Spain but only 2 years and under. The politicians will announce long term funding through the stabilization fund (to be approved by the German constitutional court on Sept. 12th)but only based on structural budget changes that bring debt under control. Of course only the ECB bond buys will actually happen. GOLD rallies on the news.

Mon, 09/03/2012 - 11:45 | 2757743 HardAssets
HardAssets's picture

"GOLD rallies on the news"

but only after first 'unexpectedly' dropping like a rock before the announcement

MSM explanations for the price action are completely unintelligible to anyone who is sober while hearing them

Mon, 09/03/2012 - 09:58 | 2757544 oldfruit1
oldfruit1's picture

tyler, ultimately the ecb is willing to lend spain money, spain keeps going on about not wanting attached conditionality but i fear this is more about not wanting to lose face than any real worry about the actual conditions. i mean since the single currency was formed there have been conditions for joining and then staying within the eurozone, but many countries have ignored these from the start (& even used fraud to doctor the books and provide faulty information about their economic realities). why would they care now about conditions set by a toothless EU, run by dodgy technocrats like draghi?

Mon, 09/03/2012 - 10:01 | 2757552 Flying Dutchman
Flying Dutchman's picture


Give a Spaniard an euro and 1 seconds later it’s gone.

It’s in their blood. In 1557, 1575, 1596.. they went bankrupt too.  They snatched all the silver out of South America. They had lots of money then. But…. War with the Dutch, French, ect. The big spender lost everything. Last century the came into the union. They cashed a lot of money from their European brothers. And again. Gone! So we all know where it ends

Mon, 09/03/2012 - 10:02 | 2757553 asteroids
asteroids's picture

"Debt without limit", Ha Ha Ha Ha. These folks don't study black holes eh? Deeper in debt you go, but once you tip over the event horizon, you are finished!

Mon, 09/03/2012 - 10:03 | 2757559 Go Tribe
Go Tribe's picture

That photo's perfect! The guy who got lost kayaking - off Long Island!

Mon, 09/03/2012 - 10:04 | 2757564 Lewshine
Lewshine's picture

Oh, you mean, Have your cake and eat it too?...No problem - Watch, and be amazed!!

Mon, 09/03/2012 - 10:11 | 2757582 Lewshine
Lewshine's picture

I'm sorry, that was the trained monkey in me giving up all hope of justice...BECAUSE I'VE SEEN THIS MOVIE 10,000 TIMES BEFORE!

Mon, 09/03/2012 - 10:05 | 2757566 LawsofPhysics
LawsofPhysics's picture

In a nutshell, things only get "real" once the supply lines start breaking.  Same as it ever was.  When real goods and serices stop crossing borders, troops will.  The paper-pushers can run the markets to the fucking moon, won't change a fucking thing.

Mon, 09/03/2012 - 10:10 | 2757572 Vegetius
Vegetius's picture

Hobo's of the EU Unite -

Draghi, Monti, Hollande, Rajoy and Samaras


“In politics, stupidity is not a handicap.”
-  Napoleon

Mon, 09/03/2012 - 10:10 | 2757578 Gordon Freeman
Gordon Freeman's picture

Mark Grant thinks of himself as some sort of wise, erudite, Philosopher King.  Hint: even the PKs needed to STFU occasionally...

Mon, 09/03/2012 - 10:15 | 2757594 masterinchancery
masterinchancery's picture

No, they don't, and they certainly don't need any "hints" from the likes of you.

Mon, 09/03/2012 - 11:05 | 2757680 LouisDega
LouisDega's picture

Whos Mark Grant?

Mon, 09/03/2012 - 11:51 | 2757763 Schmuck Raker
Schmuck Raker's picture

The author of Out of the Box.

Mon, 09/03/2012 - 10:17 | 2757602 Heroic Couplet
Heroic Couplet's picture

Yea, each country has wealth. It's money that concerns only bankers. Limit New York City to credit unions only and see how fast the weatlh keeps on keeping on.

Mon, 09/03/2012 - 10:19 | 2757605 PhilipAtticus
PhilipAtticus's picture

This article would be a lot more credible if it got basic facts straight. The German Minister for Finance is Wolfgang Schauble, not Philipp Roesler (who is Deputy Chancellor and Minister for Economy and Technology). Schauble announced today that Germany was not in favour of the ECB buying sovereign bonds on the secondary market: this is hardly news, but a fixed position for years now, and which also has not prevented the ECB from buying over EUR 200 billion EZ bonds on the secondary market.

The country is spelled "Cyprus" not "Cypress".  

The real German decision comes not on the ECB plan, but with the Bundesbank decision on the legality of German participation in ESM, on September 16th (if I remember correctly). With the existing sovereign debt purchases and the EUR 1 trillion LTRO, the ECB has already shown it can act quasi-independently. It definitely remains to be seen how far this will go.

Draghi's plan for the ESM to buy government bonds directly, with the ECB intervening in the secondary market, is based on a national acceptance of "reforms", or "structural adjustment". I wouldn't read too much into Schauble's comment: the last 2 years has been a steady erosion of German positions. 


Mon, 09/03/2012 - 10:30 | 2757623 dingoj
dingoj's picture

Cypress - LOL!

it ain't the Buba deciding, it's the German constitutional court. Then again, who cares about facts in a central bankers' world? We're all equal, sucked-dry, raped and stolen in a Goldman dominated world, where a pauper can pass for an erudite in the New Normal where 2+2 = -1 and you always lose.

Mon, 09/03/2012 - 11:15 | 2757698 AurorusBorealus
AurorusBorealus's picture

"the last 2 years has been a steady erosion of German positions."

Yes.  For all her tough talk about hard money and hard choices, Merkel is the typical democratic politician and has shown herself unable to lead or to force anyone to make hard choices.  The German position has eroded because the Euro is more than a monetary union.  Turning their backs on all of southern Europe would be the end of Nato and may well lead to war in Europe.  Germany has little choice but to cave in.

Mon, 09/03/2012 - 10:47 | 2757651 Bicycle Repairman
Bicycle Repairman's picture

This isn't Spain vs Germany.  It's "who is printing?"  Apparently the FED is reluctant to step in, again, and bail out banks operating in Europe.  The FED may prefer that the ECB print.  After the US election in November, however, the FED may bail them out, again.  So all of this may be a stall.  Somebody, maybe everybody, is going to print.

Mon, 09/03/2012 - 11:01 | 2757673 Winston Churchill
Winston Churchill's picture

Exactly.When not if,is what its all about.


Mon, 09/03/2012 - 11:28 | 2757720 KingTut
KingTut's picture

The Euro has already gone from 1.60 to 1.25.  That makes German goods very cheap in the US.  The Fed has a target EUR/USD, and won't do any more swaps.  Japan, China, and Britain are in the same boat.  However, if they all print together, it shouldn't affect FX very much.  Then, the only currency barometer is gold.  Even Central Bankers know that.  But they want inflation, just not too much.  So they have to let gold run a little.

Mon, 09/03/2012 - 11:36 | 2757732 Haager
Haager's picture

Oh yes, EUR was that high once, but you still remember the EUR/USD at the very beginning?

Mon, 09/03/2012 - 11:31 | 2757724 KingTut
KingTut's picture

To me the real issue is when do the Germans realize if they stay in a Federalized Euro Zone, they will default along with everyone else.  If they leave, they can avoid it.  Ask your average German which he prefers. 

Mon, 09/03/2012 - 11:53 | 2757766 Gromit
Gromit's picture

Give Spain a powerful they'll never have to use it.

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