• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

"Did Somebody Repeal The Laws Of Mathematics?"

Tyler Durden's picture


From Grant Williams' latest Things That Make you Go Hmm.

Remember late-2010? When Spain wasn’t a problem, but merely a potential problem? I do:

(FT, November 17, 2010): For some of the world’s biggest hedge funds, typically regarded as the savviest traders in the market, there is now one big question facing the eurozone: what is going to happen to Spain?


While Europe’s politicians are grappling with the crisis unravelling in Ireland, hedge fund managers are already turning their attention to  the issue of how – and if – a peripheral crisis in Ireland could leap via Portugal and Spain to become a systemic crisis for the eurozone as a whole.


“The Irish problem will be contained,” says Guillaume Fonkenell, chief investment officer at Pharo, one of Europe’s biggest and most successful macro funds, which specialises in trading on macroeconomic events and trends. “For us contagion is the issue ... If the market loses confidence in Spain, then all bets are off. Spain is too big to bail.”...

Back then, the general opinion was that if the contagion spread to Spain the game was over because there wasn’t enough money with which to bail out an economy the size of The Kingdom of Spain. I’m not sure exactly what happened— maybe I wasn’t paying attention—but suddenly, almost two years on and in an environment where even the rich nations of Europe are seeing an undeniable slide towards recession, there is no talk about Spain being ‘too-big-to-bail’ anymore.

Did somebody repeal the laws of mathematics?

Presumably, if the contagion reaches Italy that would be OK too now, I guess.

As it first hit the headlines as a potential problem, Spain made a presentation to potential investors that highlighted how strong the country actually was despite the conjecture amongst market participants. The presentation is highly educational and can be found in full HERE, but as a taster, here’s one particular slide that caught my eye:

Oh, to hell with it... here’s another:

Some opportunity.

* * *

Full letter:


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Sun, 08/05/2012 - 14:42 | 2679850 Joebloinvestor
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The deniers won't admit failure even when Germany needs a bailout.

I figure it is "game over" when France does, but don't expect the French to call it a "bailout".


Sun, 08/05/2012 - 14:47 | 2679865 New_Meat
New_Meat's picture

You're right of course, they will call it "le renflouer."

Sun, 08/05/2012 - 15:04 | 2679898 MillionDollarBonus_
MillionDollarBonus_'s picture

This article fails to recognize the many green shoots in the global economy. The worst of the Eurozone crisis is now behind us, and Europeans can now look forward to a brighter future, with increased job oportunities and exciting new business prospects. The last bank stress test report was simply superb, which bodes well for the stability of the European banking system. Right now, peripheral debt is a clear buy, offering double digit yields to those who trust in the strength of the global recovery and the wisdom and courage of our international leaders. 

Sun, 08/05/2012 - 15:06 | 2679905 engineertheeconomy
engineertheeconomy's picture


Sun, 08/05/2012 - 15:49 | 2679991 engineertheeconomy
engineertheeconomy's picture

You fucking loser Government Trolls are always red downarrowing my shit... well why don't you see if you have the braincells to comprehend this http://thelibertyclub.net/emry.pdf

Sun, 08/05/2012 - 16:22 | 2680078 TruthInSunshine
TruthInSunshine's picture

Not just Spain, but can anyone articulate the specific mechanics and trace the particular origins of how, why and what is keeping any of the PIIGS from being DE FACTO bankrupt?

Oh, that's right. They are.


It's an incredible illusion that the fractional reserve central banks, in cooperation with each other and with the mega banks of the world, and especially the mega banks in the U.K. and the U.S., have projected, whereby the inner circle gets to mark their assets to whatever number is necessary to deem them solvent, and whereby they can borrow as much fiat at near zero interest cost with which to buy sovereign bonds and bank an automatic spread, day after day, week after week, month after month, and so on and so forth.

It's all an optical illusion of solvency that ultimately depends on the printing and electronic 'creation' of mind-boggling sums of fiat and the inevitable suffocation of any last vestiges of true capitalism.

It's creeping more closely to a closed loop, circular logic (and circular math- see banks buying sovereign bonds with fractional reserve 'conjured' fiat lent at near zero interest), statist system of banking and commerce, with each and every successive day.

There will be 3 class of persons soon:


1)  Those who work for government, or inevitably, a highly subsidized if not completely nationalized government entity, be it a bank or an automaker,

2) Those who are on the government dole, depending on the benevolence of their dear leaders for the level of their living standards and sustenance, deprived of any pursuit of any true notion of life, liberty or the pursuit of happiness,


3) Those who literally become self-sustaining, and are viewed with animosity by the state.


Lay back and enjoy the ultimate mind rape that a system of interwoven global commerce and finance built on a foundation of absolute zero and nothing of inherent value that the tricks of the illusionist fractional reserve bankers working hand-in-hand with 'sovereign nations' has wrought.


Sun, 08/05/2012 - 16:29 | 2680090 Precious
Precious's picture

More soundbites from THE DAILY SHOW with MDB.

Sun, 08/05/2012 - 17:04 | 2680154 Arnold Ziffel
Arnold Ziffel's picture

<<whereby they can borrow as much fiat at near zero interest cost with which to buy sovereign bonds and bank an automatic spread, day after day, week after week, month after month, and so on and so forth.>>


And make Multi-Million dollar bonuses while doing it.

Sun, 08/05/2012 - 17:05 | 2680157 Marco
Marco's picture

Simple, the EU/ECB's unwillingness to let them go bankrupt ... at least not with the situation as it stands (a pan European bank run with all money flowing to Germany would destroy Europe).

As long as the EU maintains a trade balance in aggregate it can print without hyperinflation ... as long as the EU can print it can keep rescuing the trade deficit nations (and Ireland, which is only so deep in debt as it is because it's government betrayed it's citizens to save the financial industry).

Sun, 08/05/2012 - 17:41 | 2680210 TuesdayBen
TuesdayBen's picture

Great post

Sun, 08/05/2012 - 21:12 | 2680573 TonyCoitus
TonyCoitus's picture

Well said!

Sun, 08/05/2012 - 21:30 | 2680616 Poor Grogman
Poor Grogman's picture

I would categorize the three types of people differently.

1. Debt slaves,

These people provide the "demand" for the fiat to pay their debts. They must make those payments therefore must do some work or produce something to earn the money they need. This class of persons includes many actual producers such as farmers and businesses as well as the usual overcommitted McMansion dweller.

2. Financial Elite,

These people have somehow connected themselves to the money apparatus, they CREATE the money that the debt slaves need to pay off their respective loans. The legal system of fiat currency means that the slaves need the elite, unless they are willing to repudiate their debts,.

3. Others,

If you have no debt and are not part of the elite you play only a tangential role in the global debt ponzi. In this case the aim is always to make you a part of group 1.

N:B People who refuse to play by the above rules are simply an annoying but insignificant subset of group 3. And the government will happily take on debt on these people's behalf anyhow, thus they can be ignored for the time being....

Sun, 08/05/2012 - 22:43 | 2680797 FreedomGuy
FreedomGuy's picture

You nailed it Truth. All currencies and balance sheets and accounting will not be tied to anything of any value in order to handle infinite debt.

We are in a no man's land of economics and finance. We are in an Alice in Wonderland dream with the central planners. Sanity is a liability. Truth is the most reviled and unwelcome guest at the Party.

The central planners will never ever admit defeat or come clean or do the right thing. Never. To do so would be admitting they are not omniscient and omnipotent gods. When Draghi says he will not let the Euro fail he is claiming to be one. Perhaps he can suspend the laws of physics, too. This could be handy at times. Then he can stop tsunamis and earthquakes.

Even when it falls they will blame the fact they did not have enough something or other...generally power and control. When it crashes they will appear to have a new answer, too. Maybe it will be the face of a new central planner but in hard times the strong man appears and claims that with power he can fix it all. People may fall for it again as they are prone to do.

Sun, 08/05/2012 - 18:36 | 2680293 Rantabulous
Rantabulous's picture

I am relatively new around these here parts, but that is deadpan sarcasm for sure, and he is being less subtle with this post than usual. The added bonus for him would be the private joke of watching people not get his humour. 

My guess is that he(?) completely agrees with you all, but just expresses it differently.

I mean clearly now is the time to take advantage of all of the great numbers that indicate recovery. This is 1993 all over again. If you wait until its too late you'll miss the boat. Certainly I am confidently betting my family's future on this nascent recovery.

Sun, 08/05/2012 - 21:50 | 2680712 Ying-Yang
Ying-Yang's picture

I dunno... MDB much like Robo and others before them are baiting the minyons. Tyler may be throwing these gems out just to see who takes the bait.

Sun, 08/05/2012 - 22:44 | 2680798 FreedomGuy
FreedomGuy's picture

I think so. I am one who occasionally uses it, too.

Sun, 08/05/2012 - 15:08 | 2679910 Frastric
Frastric's picture

Fuck you MDB, you speak like a broken anaylist or market commentator on Market Watch or frigging Fox.

Sun, 08/05/2012 - 15:34 | 2679975 cifo
cifo's picture

You must be new to the forum.

Sun, 08/05/2012 - 16:07 | 2680053 Frastric
Frastric's picture

Not really, doing some counter-trolling...

A rarity for me...

Sun, 08/05/2012 - 17:02 | 2680150 sunaJ
sunaJ's picture

There's no such thing as counter-trolling.  Counter-trolling is just falling victim to the troll.  Besides, MDB is not really a troll, he is more of a satirist, a clown if you will, whose performance should bring deep belly laughs.

Sun, 08/05/2012 - 17:19 | 2680177 engineertheeconomy
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Sun, 08/05/2012 - 17:38 | 2680202 CPL
CPL's picture

The counter anti troll counter for the trolling anti counter?


unpossible.  completely unpossible.

Sun, 08/05/2012 - 17:45 | 2680218 engineertheeconomy
engineertheeconomy's picture

I tink I tought I taw a pussy tat, a pussy riot tat...

Sun, 08/05/2012 - 20:21 | 2680504 This just in
This just in's picture

I counter your troll with an even bigger, more bloated troll.  Spain is fixed, and its economic engine is about to be unleashed and will be the envy of Europe! 

Sun, 08/05/2012 - 21:55 | 2680723 Ying-Yang
Ying-Yang's picture

Countering the counter troll is confusing enough! I think he is the bizzaro troll.

Sun, 08/05/2012 - 21:58 | 2680731 TheFourthStooge-ing
TheFourthStooge-ing's picture


The counter anti troll counter for the trolling anti counter?

unpossible.  completely unpossible.

You are correct, although only for the northern hemisphere.

Sun, 08/05/2012 - 17:23 | 2680182 schatzi
schatzi's picture

Sad this even has to be explained. I caught on after reading his second post and thought myself slow.

Sun, 08/05/2012 - 15:28 | 2679956 Rubicon
Rubicon's picture


Sun, 08/05/2012 - 16:33 | 2680097 saturn
saturn's picture

The Masters are apparently trying to implement quantum economy as a deferred system to lock badly performing economies in time and substitute them with a version either from a parallel universe or by virtual one, based on keynesianically projected economy at its maximum performance, which appears to be any economy one earth day away from its complete collapse. What remains to be seen is how the parallel universe will be happy about having been shoved with a disfunctional bullshit. If there is any link among parallel universes, then careless editing our universe may start propagating some supercrap throughout the whole multiverse only to hit our occiput when we least expect it.

Sun, 08/05/2012 - 15:30 | 2679960 Peter Pan
Peter Pan's picture

Hey Million Dollar Bonus, I see you have managed to get about as many upticks as youhave downticks. I am astounded and I am sure you are too. Enjoy the moment.

Sun, 08/05/2012 - 16:33 | 2680098 Winston Churchill
Winston Churchill's picture

Thats because the UP tickers know he is not trolling at all.

If you cannot discern the dripping of his sarcasm ,then its

time for e hearing aid.

You have been had.

Sun, 08/05/2012 - 18:19 | 2680274 Peter Pan
Peter Pan's picture

Winston, you missed my point. I did not up tick him or down tick. I merely expressed surprise at the virtual equivalence of both the up and down ticks at a particular moment. I did not express a view about what he had written. Perhaps it is you that needs to read a little more carefully. No harm done though. Our exchange is not central to the problems at hand.

Sun, 08/05/2012 - 20:27 | 2680503 LvM
LvM's picture

Something doesn't stop being trolling by virtue of the troll being purposefully and obviously sarcastic. What MDB is doing is repetitive, not witty. He is actually a troll, regardless of what certain up-voters delude themselves into thinking. 

Mon, 08/06/2012 - 06:32 | 2681101 123dobryden
123dobryden's picture

Sarcasm may be appropriate or inappropriate, though this is generally a function of one's point of view.


Sarcasm,  was "usually the last refuge of modest and chaste-souled people when the privacy of their soul is coarsely and intrusively invaded."


Understanding the subtlety of this usage requires second-order interpretation of the speaker's intentions. This sophisticated understanding can be lacking in some people with certain forms of brain damage, dementia and autism, (although not always)[10] and this perception has been located by MRI in the right parahippocampal gyrus.[11][12]

Sun, 08/05/2012 - 15:47 | 2680002 PMakoi
PMakoi's picture

"... the wisdom and courage of our international leaders."  Now, I am really depressed. 

Sun, 08/05/2012 - 16:36 | 2680100 jeff montanye
jeff montanye's picture

no.  that's how you know mdb is doing self aware satire.

Sun, 08/05/2012 - 15:57 | 2680028 eftian
eftian's picture

Your stuff is always worth a chuckle but now I really enjoy the reactions it gets...

Sun, 08/05/2012 - 16:13 | 2680065 4 wheel drift
4 wheel drift's picture

what crok of shit.....


you must be


a). - an ekonomist

b). a government shill

c). a bureaucrat

d). all of  [ what ills society and human kind] of the above....



Sun, 08/05/2012 - 16:34 | 2680099 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

2007:  "The problems in the subprime markets seem likely to be contained."

2012:  "The worst of the Eurozone crisis is now behind us, and Europeans can now look forward to a brighter future..."

Sun, 08/05/2012 - 18:48 | 2680313 TeMpTeK
TeMpTeK's picture

said Herman Van Rompuy

Sun, 08/05/2012 - 21:09 | 2680567 BeetleBailey
BeetleBailey's picture

LOL...How's that fucking FACEBOOK stock, you douchebag?

What a fucking MORON...only a complete post lobotomy Gump like you could pen a piece of shit like you did.

Green shoots.....LOL...what a cunt.

Mon, 08/06/2012 - 00:33 | 2680907 MeelionDollerBogus
MeelionDollerBogus's picture

You forgot to ask what SHADE of green

Mon, 08/06/2012 - 00:31 | 2680902 MeelionDollerBogus
MeelionDollerBogus's picture

"offering double digit yields to those who trust in the strength of the global recovery"

-1 vote

Think about it.

You could have written "offering rates better than even a 'free market' could offer, so good even Libertarians would blush in embarassment for passing up"

So close... yet so far.

Mon, 08/06/2012 - 09:27 | 2681390 sadmamapatriot
sadmamapatriot's picture

That's sarcasm, right? The upvotes are for your wit, right?


Sun, 08/05/2012 - 15:53 | 2680019 bank guy in Brussels
bank guy in Brussels's picture

Fresh from the UK Telegraph's brilliant Ambrose Evans-Pritchard ...

100% spot-on on the euro crisis ... his recent articles really deserve a prominent lead-in on ZeroHedge for the sake of all ZH readers ... his perspective quite a shade different from Tyler's, though ...

'Venetian cunning of Draghi-Monti masterplan may save euro for now'

« ... Mr Draghi has secured a mandate for "unlimited open-market operations", a far cry from the half-hearted and self-defeating bond purchases of the last two years. The ECB at last has a licence to act with overwhelming force, like the US Federal Reserve. ...

The ECB is preparing to act as a genuine lender-of-last-resort for the first time, once the EFSF trigger is activated. It may soon start to reverse the frightening monetary contraction that has bedevilled southern Europe for the last year. »


Sun, 08/05/2012 - 16:32 | 2680096 taraxias
taraxias's picture

AEP has been wrong for twenty years now. I doubt he's got it all figured out now.

How the fuck Draghi "secured a mandate for unlimited market operations" is beyond me, and evidently only in AEP's mind.

Open market operations or not, the structural issues remain. Greece and Spain (and soon Italy) are a powder keg looking for a short fuse. End of summer sounds about right to me.

Sun, 08/05/2012 - 16:48 | 2680127 FeralSerf
FeralSerf's picture

At some point the ECB will have to print big time just to keep up with the Fed.  The EU and the U.S. are competitors and wages and other costs can't continue to increase increase indefinitely in the EU while the opposite happens in North America and still keep the EU proles on their jobs.

Europe can also, and I expect must, stop further support of NATO.  They can't afford it and it's not doing them any good.  Greece is an especially apt example.

Sun, 08/05/2012 - 18:19 | 2680273 engineertheeconomy
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Hey Trolls! I'm over here now! Quick, click on the down arrows!

Sun, 08/05/2012 - 16:52 | 2680138 AnAnonymous
AnAnonymous's picture

AEP has been wrong for twenty years now. I doubt he's got it all figured out now.


What he figured out a long time ago, is that in US citizen nations, being wrong can earn you a fat paycheck.

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