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Contagion Shakes The Euro Core As 10 Year German Bund Auction A "Complete And Utter Disaster"

Tyler Durden's picture


Earlier today Germany tried to sell €6 billion of 10 Year bunds. It "sold" €3.644 at a 1.98% yield. Which meant the German debt agency had to retain, i.e., not sell,  the 39% balance, or €2.356 billion. Said otherwise the offering was a complete disaster and as Reuters points out, one of Germany's worst bond sales since the launch of the euro, and that much higher Bund yields are coming very soon to a neighborhood near you. The sale "prompted concerns the debt crisis was even beginning to threaten Berlin on Wednesday, with the Bundesbank forced to buy large amounts of the bonds to ensure the auction did not fail. The low yields offered on the 10-year paper deterred investors from the auction, especially because of growing concerns over the cost to Germany of the escalating crisis." So what was otherwise formerly sacrosanct has just become reviled: welcome to fiat's greatest hits. The resulting 10 Year yield chart should surprise nobody. As for next steps: first the UK, then Japan, and finally the US...


That meant the central bank had to pick up 39 percent of the 6 billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue.


"It is a complete and utter disaster," said Marc Ostwald, strategist at Monument Securities in London.


"This does not bode well, it is the worst of uncovered auctions that we've had this year and little wonder that the Bund sold off on the back of it."


German Bund futures, the euro and European stocks fell after the announcement of the auction results.


The country's debt agency said the shortfall in the sale reflected worsening market nerves on European debt markets but added it would sell back the retained amount to investors on secondary debt markets and that Germany would not face a funding bottleneck.


The results compared with an average retention by the central bank of 17.83 percent at 10-year bond auctions in 2011. Data from IFR, a Thomson Reuters service, showed this to be the highest Bundesbank retention since at least July 1999.

And the experts' opinion:


"Without the massive Buba retention the auction would have been heavily undersubscribed. The paper was priced at an average 100.15 and low price was 100.01. The auction tail was a large 14 cents after the already large 10 cents at the previous auction.

"The auction was extremely poor. Despite the new paper looking attractive versus previous rolls in the grey market, the extreme richness of the German debt weighed on today's demand for the new line."


"It is a complete and utter disaster. If Germany can only manage an 0.65 cover in actual terms for what is going to be their next benchmark then what hope for everybody else?"

"It really tells you that the Bund yields are at the completely wrong level ... never mind that they are a safe haven. This does not bode well, it is the worst of uncovered auctions that we've had this year and little wonder that the Bund sold off on the back of it."

"A lot of it relates to very low yields. The other part is that market makers don't want to have a position because of the very distressed nature of financial markets as a whole. There's certainly a partial element of 'they would rather not have euros' in there."


"The tail is moving exponentially higher and they failed to get bids for 35 percent of the auction so it's a miserable looking sale and even worse than what we saw at the Schatz auction last week.

"It perhaps goes to show the uncertainty surrounding the euro zone crisis has escalated in terms of the overall outlook to incorporate even Germany."


"It's really bad. The Bundesbank had to retain 39 percent of the issue. Bunds are starting to lose their appeal because markets have to believe the euro bonds story and Germany is very close to start, essentially, to guarantee the debt of other countries. The real bid/cover was 0.65, not 1.1."


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Wed, 11/23/2011 - 08:17 | 1906077 Fips_OnTheSpot
Fips_OnTheSpot's picture

Good night!

Wed, 11/23/2011 - 08:19 | 1906079 slaughterer
slaughterer's picture

ECB printing is only solution to this mess at this point.  Got that through your head now Germans?

Wed, 11/23/2011 - 08:21 | 1906082 jcaz
jcaz's picture

LOL- yeah, cause that went so well for them back in the '20's......

Wed, 11/23/2011 - 08:34 | 1906126 Comay Mierda
Comay Mierda's picture

printing is like putting out a house fire with a flame thrower

worldwide debt write-offs are the only way out

Wed, 11/23/2011 - 08:44 | 1906147 youngman
youngman's picture

If the Germans are smart...they will require all of the gold held buy the central banks and soverigns that need the ECB bailouts beforehand to be delivered to Germany for safe keeping....Gold was a good investment in the Hyperinflation Wienmar Republic days...or at least a "bestest" one...nothing was good...

Wed, 11/23/2011 - 08:51 | 1906170 Comay Mierda
Comay Mierda's picture

the best investment was food.  doctors, lawyers, and other highly payed professionals were sifting through trash just like the poor people trying to find food.

start growing your own food, and have a nice reserve stock on hand.  unless you want to wait in soup/bread lines when the shit hits the fan

Wed, 11/23/2011 - 08:55 | 1906179 EscapeKey
EscapeKey's picture

Not all food types can be stored indefinitely. And you'll still need some method of exchange. Gold/silver are far more liquid instruments than kgs of rice.

Wed, 11/23/2011 - 10:16 | 1906492 He_Who Carried ...
He_Who Carried The Sun's picture

And this is a blog providing background...? For headlines I have Bloomberg!

This is about a power-struggle between Barroso who made his case for Eurobonds today and Merkel who says: NO WAY!

We have no reason to believe that parrot Barroso will win this fight as Merkel continues to call the shots, but they try to raise the pressure on that brave woman - in the meantime prepare for some bumpy ride...


Wed, 11/23/2011 - 11:34 | 1906795 el Gallinazo
el Gallinazo's picture

Too late.  Possession is 9/10 of the "law."  Anyone know how Chavez is doing as to getting his gold back?

Wed, 11/23/2011 - 08:45 | 1906152 Esso
Esso's picture

That would probably be true IF they were looking for a solution rather than just trying to extend the Ponzi until there's nothing left to loot.

Wed, 11/23/2011 - 08:26 | 1906097 Quintus
Quintus's picture

I can see how ECB printing might delay the inevitable, but how, exactly, is it a 'Solution' to the fundamental structural imbalances that are pulling the Eurozone apart?

Has the Fed's massive printing of dollars fixed the US economy yet?

Wed, 11/23/2011 - 08:48 | 1906148 Ethics Gradient
Ethics Gradient's picture

Agreed. The Euro dream has been shown to be a sham. The markets don't want to know and are selling European bonds to the ECB as fast as they are willing to buy. With printing will come a flood of monetization and inflation. It's not like the US/UK or Japan; their behaviour still has some credibility and free market participation (beyond selling). The results in Europe would compound impending disaster with an avoidable catastrophe.

I try not to swear on ZH out of respect for the intelligence of readers and contributors, but I can think of no other way of saying this. Europe is fucked.

Wed, 11/23/2011 - 09:10 | 1906194 TruthInSunshine
TruthInSunshine's picture

The Bernank will be pushing hard to the hoop to stealthily use American green & white toilet paper to bail out nations using € toilet paper if Germany fails in its current primary directive of getting any of the EU Member States' debt sold, and we can see now that there's a major crack forming inasmuch as Germany appears (at least at an early juncture) to be having difficulty getting its own debt sold, and if Germany is the EU strong man, well then....

I expect that the Fed & Treasury have been very hard at work on a variety of urgent tasks, not the least of which is how to as sneakily as possibly become buyers of last resort for EU debt, with a major emphasis on not tipping off the muckrackers as to what they're up to.

How they would accomplish this is not at all clear to me, but I'm am confident that there are devices, procedures and processes that can all be very opaquely named/described (maybe even having a name that is indicative of a process at odds with the mechanics of what's being done) to allow The Fed and/or Treasury to engage in a massive EU bailout should Germany fail (for political/social or economic reasons) to keep the pieces of the perpetual debt piling-up process in play for some time longer.

What I'm most interested in, however, and what's fascinated me for some time, is how the technicians at the Fed are capping inflation where it currently resides (at what I believe is an honest 8%+ per annum going on at least 12 months now, and an honest 5% the prior 12 months, which is 2.3x to 4x the official BLS figure), and whether they're going to successfully stop what I see as an inevitable march towards an honest 10%+ (at around which point, they lose control, due to psychological reasons, and 15% and then 20% is here in shorter a period of time than it took inflation to march from 5% to 8%).

I suspect that inflation is as low as it is (even though its multiples higher than the official, tortured statistics) because the staggering growth in the money supply exists in bank excess reserve accounts, which have been stuffed full of fiat by The Fed, with said banks clutching those excess reserves with white knuckles, deathly afraid to loan it out in a manner that would be remotely approximating what would happen in a non-broken market economy (since The Bernank has created an environment whereby demand for loans from credit worthy borrowers is anemic and appears to be growing even more so, and since banks are rationally holding on to as much reserves as possible giving their black hole balance sheets, in an attempt to provision for further losses).

God only knows that if the banks were lending in any manner approaching the levels we see in non-broken (aka non-Bernank'd) markets, inflation would be TO ZE MOON.

So, I suspect The Bernank believes markets will be sufficiently broken for some time so as to allow him to swallow up a larger portion of EU debt without creating incrementally larger inflationary pressures, and he may even be desirous of breaking market mechanisms further to allow him to do so, which if he would be successful in doing, would inevitably result in probably the longest real period of economic contraction we Americans will have seen since the 1930s, whether we're technically defined as being in a depression or not.

The irony is that The Bernank has created enough inflation to allow him to report GDP growth, even though it's phantom growth, resulting from a relatively high and accelerating rise in prices which more than offsets a very steep decline in consumption (of even relatively inflexible goods/services; e.g. if gasoline prices rise by 58% or so, which they now have since early 2009, and consumers cut gasoline purchases by 9% - and again, gasoline is more a necessity than not for many - and this same phenomena is applicable across most goods - The Bernank's ruse can continue on).

My final point is that I do not understand the dogmatic resistance to allow for modest deflation in the economy given the fundamentals (wherbey deflation would increase purchasing power and spur consumption), and given that whatever The Fed claims about inflation (i.e. they can keep it moderate and sustained over a long term horizon) can also be claimed about deflation (not to mention that deflation has been falsely portrayed as economic boogey man, IMO, but that's a discussion for another time)....

...unless of course The Fed's true goals (based on fractional reserve practices/modern money mechanics) are as malicious as many of us suspect they are.

Wed, 11/23/2011 - 09:16 | 1906247 twotraps
twotraps's picture

Truth, good morning, totally agree, a little deflation lets them say that the mkts still work and are pricing in uncertainty and allows an increase in purchasing power.  Maybe what they rail against the most, deflation, might unfold anyway.

Wed, 11/23/2011 - 09:21 | 1906260 TheRagingTory
TheRagingTory's picture

50% Wage inflation in Germany

20% Wage inflation in Greece

Structural imbalances are closed

Wed, 11/23/2011 - 08:30 | 1906105 Sudden Debt
Sudden Debt's picture



Gütenberg was a German

Heidelbergs are the best presses in the world and... are German.


They know my friend....

They know it better than we do....


Wed, 11/23/2011 - 08:29 | 1906108 DutchDude
DutchDude's picture

That'll work for a couple of years, but then it'll come back and bite you in the ass, bigtime...

Everybody is getting out of EZ bonds and i can't blame them.

It's a complete mess and the Euro will fall over it, one way or another, sooner of later. Best is sooner so the European people don't get screwed over tenfold, trying to fix this mess.

Wed, 11/23/2011 - 08:49 | 1906163 Esso
Esso's picture

What's "best for the European people" don't enter into it. Quite the opposite, in fact.

Wed, 11/23/2011 - 08:44 | 1906149 AbelCatalyst
AbelCatalyst's picture

This is the catalyst that will send Germany to the Mark... Maybe not today or tomorrow but fairly soon... This failure is a serious threat and it will only get worse as the PIIGS slide deeper into the darkness.... Germany, like any country, will play nice until their back is against a wall.

Germany is about to fire up their own printing presses!!!

Buy EUO....

Thu, 11/24/2011 - 07:40 | 1910202 slaughterer
slaughterer's picture

Switzerland looks incredibly smart in their refusal of the Euro, but even that is being turned against them with the flight to CHF as safe haven.  

Wed, 11/23/2011 - 08:21 | 1906081 Coldfire
Coldfire's picture

Auf wiedersehen, Euro.

Wed, 11/23/2011 - 08:22 | 1906083 Paul Thomason
Paul Thomason's picture

It's the bloggers fault.  And those scumbag protesters - they should all be rounded up and shot.  The US and Germany should get Syria to do the slaughtering without fear of retribution because they dont have any oil, right?

Wed, 11/23/2011 - 08:24 | 1906084 GeneMarchbanks
GeneMarchbanks's picture

"The tail is moving exponentially higher and they failed to get bids for 35 percent of the auction so it's a miserable looking sale and even worse than what we saw at the Schatz auction last week.

Then he goes on:

"It perhaps goes to show the uncertainty surrounding the euro zone crisis has escalated in terms of the overall outlook to incorporate even Germany."

Bravo sir. I can see you are not a waste of space at Westlb.

Wed, 11/23/2011 - 08:23 | 1906085 XRAYD
XRAYD's picture

As The Bernank does the "twist" his pants will fall off and expose the truth.


Ther is no bazooka!

Wed, 11/23/2011 - 08:35 | 1906127 Xando
Xando's picture


Wed, 11/23/2011 - 08:24 | 1906086 Carlyle Groupie
Carlyle Groupie's picture

Easy. Raise interest rate dramatically on the long end.

Wed, 11/23/2011 - 08:27 | 1906099 EscapeKey
EscapeKey's picture

That would be totally awesome for the housing bubbles in Spain, Italy, France, and Ireland.

Wed, 11/23/2011 - 08:52 | 1906174 Carlyle Groupie
Carlyle Groupie's picture

To hell with your little ticky tack boxes.

Ignore my advice at your own peril.

Wed, 11/23/2011 - 09:02 | 1906197 RoadKill
RoadKill's picture

The easy solution is to spend only what you collect in taxes. Then you don't need to borrow money. Sure you still have to refinance, but if the market gives you too much shit you tell them you'll forcibly refinance them into new 10 year notes at 0%.

This has always been the "easy" solution for everyone. If Greece introduced REAL an immediate austerity that balanced the budget tomorrow, then they could handle the refi risk the same way. But their dumb ass commie voters don't like it.

And if someone DARES to say the Greeks are suffering enough austerity - tell me what is the retirement age right now? What is the average public sector union wage + benefits vs private sector?

We could do the same thing in the US if Congress and Prez had a set of balls between them.

Make SS it's own set of books. No more counting it's surplus as offset to general deficit. Of course with the Obama tax cuts it's no longer in surplus, so you'd have to undo those. And you'd have to raise retirement age starting in 2012 not 2026. Same thing with Medicare. Own set of books. Force it to cut benefits until it is properly funded on an accrual basis. Stop playing games.

Then you keep doing that with the Post Office (raise stamp prices and cut services/wages till you are making a profit) Highway Trust Fund and Amtrack.

Once you get to the general budget it's harder. Mandatory 10% workforce reduction. For those that keep their jobs, 10% paycut and massive changes to benefits.

Cut defense spending 50% by consolidating all foreign bases to 5 regional fast response bases and bringing home 50%+ of the troops.

Finally eliminate all spending in every department that isn't strictly Constitutional. Federal Gvnt has 0 business in Education/Health Care/Welfare. Send it to the states. Cut foreign aid to 0. Get rid of every single grant to every arts / culture / social research program. No Farm aid. Just gut everything,

If you cut spending to less then tax collections - NO EXCuSES - refinancing becomes easy. You control the terms.

Sure it will suck for awhile, but you are paying a long over due bill. And once the public sector is on the same footing as the private sector (9% unemployment, wages haven't risen since 2000, benefits are 90% employee funded), we can talk about raising taxes.

Wed, 11/23/2011 - 09:24 | 1906249 i-dog
i-dog's picture

Excellent summary of what is needed (though I'd cut defense even more...the US already has enough nukes to deter any aggresssors). I'd vote for you!

However....those in charge have other objectives, and those objectives do not include fixing anything until after the middle class has been totally destroyed.

Wed, 11/23/2011 - 09:32 | 1906288 Carlyle Groupie
Carlyle Groupie's picture

Vote for that proposal and you'll be living in the dog house with Snoopy.

I say raise rates. Develop some sexy tee-vee commercials about personal bond ownership and open up the gates to retail.

Sell more bonds! Spend more .gov! Ever increasing GDP is the only American Dream that I want to know!

Wed, 11/23/2011 - 10:05 | 1906423 i-dog
i-dog's picture

A message from your sponsor:

Wed, 11/23/2011 - 11:36 | 1906799 Rynak
Rynak's picture

And if someone DARES to say the Greeks are suffering enough austerity - tell me what is the retirement age right now?

It WAS 61, BEFORE it was raised recently. Now it is approximatelly similarily ridicuosly high, as in germany... and among the highest in europe.


NONE of your mentioned solutions... as reasonable as they may sound... will work on their own - because you're forgetting something very simple: Greece is still in the EMU, and as long as they're in it, they can attempt to balance the budget as much as they want, they will not be able to do so.

Why not? Because the by you oh so hated "social programmes", are a COMPENSATION. A compensation for what? Well, lack of balanced economy, and thus lack of buying power and employment.

I know, a lot of retards on ZH like to think, that if one only axed the symptoms of systematic issues, the systematic issues will as by magic go away - unforunatelly, it doesn't work that way. But that line of thinking requires motivations that go beyond knee-jerk reactions and sadistic envy.

Ya dislike the way overbloated costs of social programmes in nations? Well, then how about you come up with a way to remove the NEED for them, by removing the systematic inbalances and defects of the system? Or is that too much "work" for you, slacker?

Wed, 11/23/2011 - 13:04 | 1907181 Things that go bump
Things that go bump's picture

Euthanasia rather than retirement?  Isn't that what they used to do to slaves who had outlived their usefulness.

Wed, 11/23/2011 - 08:24 | 1906087 EscapeKey
EscapeKey's picture

Euro -> Pound -> Yen -> Dollar?

Personally, I think the Yen looks more vulnerable than the Pound, but once the Euro goes I think all bets are off.

Wed, 11/23/2011 - 08:28 | 1906104 Quintus
Quintus's picture

Certainly, the fundamentals of the JPY are worse, but the UK, with it's much larger financial services sector and massive exposure to the Eurozone banking system is much more likely to be dealt a devastating blow if the Euro starts to break up.

Wed, 11/23/2011 - 08:31 | 1906114 EscapeKey
EscapeKey's picture

That's true, but Japan is largely an export economy, so once we head back into the depression, their finances will implode.

Wed, 11/23/2011 - 08:31 | 1906116 Sudden Debt
Sudden Debt's picture

Out of your list, I think Clamps are the savest bet ESC ;)

Wed, 11/23/2011 - 08:24 | 1906088 Temporalist
Temporalist's picture

It's wheelbarrow time in Weimar land.

Wed, 11/23/2011 - 08:32 | 1906118 Sudden Debt
Sudden Debt's picture



we have dumptrucks now :)


Wed, 11/23/2011 - 08:24 | 1906090 midgetrannyporn
midgetrannyporn's picture

Merkel will fold like a cheap tent.

Wed, 11/23/2011 - 11:55 | 1906870 JOYFUL
JOYFUL's picture

Why all the down votes? He\She jus tellin it like it is!....

oh, I get didn't realize this is Angelas' Avatar!

rough trade{in} snitchez!

Wed, 11/23/2011 - 08:25 | 1906091 Rich V
Rich V's picture

Is that the 1812 overture I hear playing in the background?

Wed, 11/23/2011 - 08:25 | 1906092 sharkbait
sharkbait's picture

"Failed auction" coming soon to a bond market near you!  Don't go see it alone!!!!

Wed, 11/23/2011 - 08:25 | 1906094 GerritB
GerritB's picture

Lights out! It's over!! Uncle Ben is coming to town!

Wed, 11/23/2011 - 08:27 | 1906096 slaughterer
slaughterer's picture

Panzerfaust sofort, bitte!  Dummköpfe!

Wed, 11/23/2011 - 08:40 | 1906136 magpie
magpie's picture

Es kommt direkt auf uns zu !

Es ist aus mit uns !


(taken from Close Combat 3)


Wed, 11/23/2011 - 08:26 | 1906098 TheSheepWolf
TheSheepWolf's picture

Next stop 1.3910

Wed, 11/23/2011 - 08:28 | 1906103 TheSheepWolf
TheSheepWolf's picture

wrong direction..... 1.3190 :-)

Wed, 11/23/2011 - 08:27 | 1906100 jm
jm's picture

Swedish 10 looked a little shaky but it's back in stride now.



Wed, 11/23/2011 - 08:27 | 1906101 atoast2toast
atoast2toast's picture

bad timing to publish this yesterday,1518,799059,00.html

Wed, 11/23/2011 - 08:47 | 1906158 Schmuck Raker
Schmuck Raker's picture

There is NEVER a good time to publish the truth.

Wed, 11/23/2011 - 08:29 | 1906106 MFL8240
MFL8240's picture

And still no one wants Gold?  Come on, just how stupid does this group think we are.  I guess very stupid because if we had any brains we wouldn't have a Muslim in the White House and we would not be surrounded by liars and theifs that have been courrpted by a group of Wall Street gansters.

Wed, 11/23/2011 - 08:37 | 1906107 Franken_Stein
Franken_Stein's picture

Yeah, it's an utter disaster, said the City of London spiv.

So this must be the ominous collapse, courtesy of Zerohedge, that we were promised 3 years ago already.

There is now bloodshed and violence on our streets, people are crying bloody murder here as we speak, because we only had a 65% cover ratio.


Oh my God !

We are all gonna die.


When our whole country was in shambles after WWII, when 9 million German men out of a population of 60 million didn't come home from the front, oh that was nothing.


But now that an bond auction failed, nope that is UNACCEPTABLE and the foreplay to the opening of the gates of hell !


Bwaaahahahahaha !


Clearly you Americans have NO IDEA what misery and hardship is.

You've been living in your cozy country with all your amenities and no major disaster on your own soil for the last 70 years.

What do you know about misery  ?


Noooothin' !


Misery for an American is, when the price of a Cheeseburger jumps from $0.90 to $1.10, when he can't drive into his Burger King any more with his car and ACTUALLY has to use his own legs and WALK !


Can you imagine this ?

Walking from A to B, with your own 2 legs ?

What an outdated and anachronistic concept !

Wed, 11/23/2011 - 08:37 | 1906131 jcaz
jcaz's picture

Well duh-  it's cause we moved OUT of your country.......

(Cue to Sam Kinison-  "U-Haul is the solution- it's sand!")

Wed, 11/23/2011 - 08:52 | 1906172 end da fed
end da fed's picture


While I'm not a "USA! USA! USA!" chanting type of gal... you're welcome that you're not still required to be group chanting "Heil, Hitler!"

Wed, 11/23/2011 - 11:42 | 1906825 eaglefalcon
eaglefalcon's picture

Heil Hitler!


Ist er krank?

Ich bin kein Arzt!


Wed, 11/23/2011 - 08:38 | 1906134 midgetrannyporn
midgetrannyporn's picture

Your high tolerance for misery is admirable. lulz

Wed, 11/23/2011 - 08:43 | 1906141 Use of Weapons
Use of Weapons's picture

I'm not sure that's true of all of America:,29307,1882089,00.html


We have no Great War. No Great Depression. Our great war is a spiritual war. Our great depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars, but we won't. We're slowly learning that fact. And we're very, very pissed off.


Ask, you shall receive. One 'Great Depression' with a side of schadenfreude coming up.


Remember to salt the fries.

Wed, 11/23/2011 - 08:45 | 1906150 twotraps
twotraps's picture

not sure ZeroHedge represents the fat part of the American curve...and I do mean Fat.  Stick to the auction results.  It drops off just as sharply outside of any large german city as it does in the US.

Wed, 11/23/2011 - 08:52 | 1906173 Dugald
Dugald's picture

You say Misery? Others would say RETRIBUTION!

Wed, 11/23/2011 - 09:00 | 1906189 Implicit simplicit
Implicit simplicit's picture

Giving up cheeseburgers can be miserable


Wed, 11/23/2011 - 09:33 | 1906295 DosZap
DosZap's picture


Oh, so COZY..............................

9 out of 60?,huh?

Well dipwad who started the shit?.

There are several hundred thousand Americans buried in France/and Europe, and lost forever thanks to your country.

Misery?,screw you and your misery.

Two World Wars, and you fucks started both,and we finished them.

Cry me a river.Better yet,  walk down to it.

Bwaaahahahahaha !

Wed, 11/23/2011 - 10:22 | 1906518 shortus cynicus
shortus cynicus's picture

Well dipwad who started the shit?

Just ask Prescott Bush & co.

Wed, 11/23/2011 - 10:31 | 1906548 Seer
Seer's picture

Very well played!

US sacrificed lives in order to protect the banksters: Britain owing the US.

Germany was dead the second that it poked the Soviet Union.  The US only came in to mop up (with Britain decimated the US could charge in and take over the reigns of empire).

French bashing etc. is nothing but propaganda.  Besides, if the US had really given a shit it would have been there at the start, not the END.  So much for helping out the friend that enabled you to run the British out of your country (helped underwrite the Revolutionary War).

Wed, 11/23/2011 - 14:06 | 1907453 Things that go bump
Things that go bump's picture

No good deed goes unpunished.  

Wed, 11/23/2011 - 08:29 | 1906109 Dick Darlington
Dick Darlington's picture

And all the eurocommunists are screaming for "more Europe", eurobonds, bla bla bla. What an utter disaster euro has been and they STILL refuse to admit the failure. The sooner the disintegration begins, the smaller tha final damage will be.

Wed, 11/23/2011 - 08:30 | 1906110 Boilermaker
Boilermaker's picture

Ms. Becky on CNBC just said it was due to a 'technical glitch' and not organic demand issues.

See?  It's OK.

Wed, 11/23/2011 - 08:31 | 1906111 Temporalist
Temporalist's picture

Latvian Bank troubles:

LVL 100 million shortage turns up at Krajbanka

"Krajbanka President Ivars Prieditis has indeed been arrested. Other board members – Martins Zalans, Svetlana Ovchinnikov and Dzintars Pelcbergs have also been detained. The police will now investigate whether the persons have something to do with the huge shortage of funds."


In America banks get police.  In Latvia police get you!

Wed, 11/23/2011 - 08:47 | 1906160 Curtis LeMay
Curtis LeMay's picture

The bank's president is now in jail...

Good place for bankers! :)

Wed, 11/23/2011 - 08:30 | 1906112 lolmao500
lolmao500's picture

Except America bond auction can't fail since the primary dealers will buy 100% of it if needed.

Wed, 11/23/2011 - 08:30 | 1906113 twotraps
twotraps's picture

Good morning.  WOW, mkts that actually price things in like 'uncertainty'.  It is wild to watch this unfold for sure, I keep coming back to one thing....The Euro was a politically driven event.  There was no economic necessity, they did it to compete as a block of countries against the dollar.  Shocking that it held together so long, built on mostly political capital.  Now, they have the consequences of political decisions in economics.........and they have economic necessity.     Keep looking for scenarios here but with sweeping politica/rule changes coming, who knows what will happen.     

Wed, 11/23/2011 - 10:48 | 1906594 Seer
Seer's picture

"The Euro was a politically driven event.  There was no economic necessity, they did it to compete as a block of countries against the dollar."

Well, having helped implement some computing systems in Europe I'd take a bit of issue with the "no economic necessity" argument.  Well, nothing is really necessary (except Food, Shelter and Water).  All the various rules and currencies were messy.

I'm NOT arguing in FAVOR of the Euro, it's just that your statement doesn't hold up unless one views it all in the context of "fiat is bad," which will then mandate that the USD also be viewed as the same (no necessity for it either).

As far as the primary objective being to compete against the "dollar" (assuming USD), I suppose one could view it that way.  But, does it really matter?  It is, after all, competition.

I get this sense that you're injecting emotional nationalism into this (US).

But, hey!  Euro collapse- long live the USD! (because, well, because we know how pure its currency is handled, being that it was born out of the noblest of intentions)

Wed, 11/23/2011 - 13:56 | 1907410 twotraps
twotraps's picture

Seer, appreciate the comments.  As far as it being a political event and, at its inception there was no crisis, imminent threat or anything else that forced them together....sure, the currency game was uneven and rules were different everywhere, that aside, I mean to convey that the entire project started out as a political project.  It was sold to everyone as a way to band together and compete as a larger trading block than the dollar.  Not waving the flag here.   It is worth remembering that it was also sold with the promise of eventual political union....   


I feel its a great example of poliical decisions gone wrong, and facing real economic consequences.  They wanted the Miracle of the Market, and all agreed to it despite well documented discrepancies with Greek and Irish balance sheets/debt to GDP etc.  They went ahead you do with political decisions.  If that were a take-over or any other business deal the smart players would have walked away before getting in bed with partners that were in shambles.   The Euro Crisis did not fall from the sky, simple decisions with massive ramifications for everyone living there and investing there.  Given their willingness to bend and make allowances in the past, does anyone really think they will let it fail at this point??  Again, appreciate your comments, have a good weekend.

Wed, 11/23/2011 - 08:31 | 1906115 Housicker
Housicker's picture

As long as the banks are not recapitalized we will have more of the same. Banks can not hold any inventory anymore so the Buba has to take their part.

Wed, 11/23/2011 - 08:32 | 1906117 Silverhog
Silverhog's picture

Where's cnbc's Then it Dove Bove? He's not screaming BAC is a steal this morning.

Wed, 11/23/2011 - 09:38 | 1906306 TruthInSunshine
TruthInSunshine's picture

Dick Bove is nowhere to be found on cnBSc this morning, but I hear Barton Biggs is on deck for an interview with Joe 'Smirking Leprechaun' Kiernan, and that Barton 'Small AUM' Biggs will be making a very bullish case on going long IBM, "because they make the best damn typewriters in the business, and stores will be selling as many typewriters as they can procure this Holiday Season."

Wed, 11/23/2011 - 08:34 | 1906124 Diplodicus Rex
Diplodicus Rex's picture

For the non-traders amongst us can someone direct me to an explanation of "tail risk" or "aution tail" or indeed anything to do with the "tail"? Thanks.

Wed, 11/23/2011 - 08:44 | 1906145 Implicit simplicit
Implicit simplicit's picture

I'm not a bond trader, but I believe it means the widest spread as in tail risk referring to largest standard deviation away from the norm. In other words the yields are risng and bond prices shrinking to a greater degree than normal.

Wed, 11/23/2011 - 08:45 | 1906153 Housicker
Housicker's picture

difference between average bid and lowest bid

Wed, 11/23/2011 - 09:45 | 1906315 i-dog
i-dog's picture

In a nutshell: The higher probability that a future event (prices/yields) can occur outside the expected norm when market conditions are unstable. The probability of a black swan.

Thu, 11/24/2011 - 07:27 | 1910189 Diplodicus Rex
Diplodicus Rex's picture

Thanks for all the replies. I love this site. Every day is a school day with lessons likely to save your life. To the Tylers, thank you for the best economics site in the world.

Wed, 11/23/2011 - 08:35 | 1906129 Waterfallsparkles
Waterfallsparkles's picture

Even with Zero Percent Interest in the Bank who would buy those risky Bonds for less that 2%. Are they Crazy?

Maybe at 25%, just Maybe.  I know I would not buy even for 25% with the inherent risk.  At 75% I might consider it.

I mean really.  Even the Credit Card Company's can get 25%.

Wed, 11/23/2011 - 08:43 | 1906143 Josephine29
Josephine29's picture

Actually I thought that the situation was summed up well in the quote below.

Whilst I have been typing this article I notice that yet another German bond auction has been weak and I have been pointing out to those who have asked me that in my opinion they are looking at it the wrong way. You see in many ways it is more of a surprise to me that anyone would accept an interest-rate of 1.98% for ten years in these “expect the unexpected” times than some have turned it down.

Wed, 11/23/2011 - 08:44 | 1906144 oogs66
oogs66's picture

treasuries not looking so hot either

Wed, 11/23/2011 - 08:54 | 1906177 youngman
youngman's picture

My question is why are they selling them...why not cut expenses instead and live within their means.....ouch..a politician and a Unionista hate to hear that

Wed, 11/23/2011 - 10:53 | 1906614 Seer
Seer's picture

Because the wheel has built up so much mass (debt) that it HAS to turn!

We're all standing alongside the wheel helping it along.  If the wheel stops it falls over.  Which side of the wheel to be on?...

Uh, oh, BIG hill ahead!

Wed, 11/23/2011 - 08:58 | 1906184 chinaguy
chinaguy's picture

Yeah, well, the DAX doesn't seem too upset about it.

Wed, 11/23/2011 - 09:07 | 1906211 ambrosiac
ambrosiac's picture





Waitaminute.  I thought first we take Manhattan.

Wed, 11/23/2011 - 09:34 | 1906289 Ned Zeppelin
Ned Zeppelin's picture

I think if you are a bonus-seeking bankster, unhappy with Germany's reluctance to succumb to the lure of debt monetization, and want to force Berlin into the ECB printing swimming pool, you snub them at an auction of their debt. Not hard to imagine who cooked up this plan.

And if you are holding a basketful of Euros, and wish to be safe, where else would you park them besides Germany?

The ECB will print, and massively, before this is over.

Wed, 11/23/2011 - 09:39 | 1906311 xcehn
xcehn's picture

Louis Salinger: "Sometimes you find your destiny on the road you took to avoid it."

Happy Thanksgiving, BiTcHeZ!

Wed, 11/23/2011 - 10:33 | 1906554 Iam_Silverman
Iam_Silverman's picture

"Which meant the German debt agency had to retain, i.e., not sell,  the 39% balance, or €2.356 billion"

So, were their Primary Dealers alseep, or what?

Wed, 11/23/2011 - 10:42 | 1906572 vote_libertaria...
vote_libertarian_party's picture 2013 TBT calls look a little better this morning.

Wed, 11/23/2011 - 10:51 | 1906608 Watson
Watson's picture

Doesn't this just further pressure Germany to exit the EuroZone and restore the DEM?

Firstly, would be very popular among their citizens.

Secondly, the Bundesbank had a pretty good reputation. So if anyone wants debt, theirs, untainted with other Euro-nations or the ECB, will be regarded as top quality.

Wed, 11/23/2011 - 11:17 | 1906726 Seer
Seer's picture

Clearly this means a continued hit against US equities:

1) Europe's credit is going to be shut off;

2) USD will strengthen.

On point #2 I'm sure that TPTB in the US are shitting over.  US govt is able to attract more funding (for now), but at the expense of the economy (of course, this has been the trend, but now it's escalated).

Not seeing US debt diminishing.  Trade balance will continue to be fucked: based on point #2 and the fact that the majority of US trade debt is based on energy imports [which don't come from Europe]).

Anyone want to wager whether the USD and Euro get married?  The "threat" will be "China," Iran (oil; oil bourse) and, based on recent arms treaty disputes, Russia. (all the US's "bad guys")

Wed, 11/23/2011 - 14:47 | 1907626 twotraps
twotraps's picture

Why not, they may enter some 'risk sharing mechanism' or some other made-up shit to buy time without locking into an agreement.  They may have been cooperating all along, they could make some of that public, for the illusion that all manner of steps are being taken.  What can be ruled out at this point...they make the rules and print the money, what are they waiting for?

Wed, 11/23/2011 - 15:15 | 1907788 Seer
Seer's picture

Yeah, even though I stated it a bit tongue-in-cheekishly, the fact is that the Fed has propped up the EU.  So, in essence there's already been a bit of a marriage.  It's this that prompted me to think of this.

Their best strategy is obfuscation.  Circular logic and actions work well to this end.  Clearly we're running out of broke economies to lend to other broke economies...

Wed, 11/23/2011 - 16:43 | 1908230 twotraps
twotraps's picture

I am waiting for a whole new vocabulary of Financial Terms to quantify, trade, package and sell all the made-up stuff that has been going on.  At the end of the day, broke is broke  or the value of everything is detstroyed cause they were too drunk or scared to admit insolvency.

Wed, 11/23/2011 - 12:56 | 1907154 stirners_ghost
stirners_ghost's picture

As long as there still exists even one institution which the individual may not dissolve, the ownness and self-appurtenance of Me is still very remote. How can I be free when I must bind myself by oath to a constitution, a charter, a law, "vow body and soul" to my people? How can I be my own when my faculties may develop only so far as they "do not disturb the harmony of society" (Weitling)?

The fall of peoples and mankind will invite me to my rise.

Listen, even as I am writing this, the bells begin to sound, that they may jingle in for tomorrow the festival of the thousand years' existence of our dear Germany. Sound, sound its knell! You do sound solemn enough, as if your tongue was moved by the presentiment that it is giving convoy to a corpse. The German people and German peoples have behind them a history of a thousand years: what a long life! O, go to rest, never to rise again - that all may become free whom you so long have held in fetters. - The people is dead. - Up with me !

O thou my much-tormented German people - what was thy torment? It was the torment of a thought that cannot create itself a body, the torment of a walking spirit that dissolves into nothing at every cock-crow and yet pines for deliverance and fulfilment. In me too thou hast lived long, thou dear - thought, thou dear - spook. Already I almost fancied I had found the word of thy deliverance, discovered flesh and bones for the wandering spirit; then I hear them sound, the bells that usher thee into eternal rest; then the last hope fades out, then the notes of the last love die away, then I depart from the desolate house of those who now are dead and enter at the door of the - living one:

For only he who is alive is in the right.

Farewell, thou dream of so many millions; farewell, thou who hast tyrannized over thy children for a thousand years!

Tomorrow they carry thee to the grave; soon thy sisters, the peoples, will follow thee. But, when they have all followed, then - - mankind is buried, and I am my own, I am the laughing heir!

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