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EMU: A Flightless, Awkward, And Bumbling Region
As usual, JPMorgan's Michael Cembalest cuts to the wick of the problems facing European leaders. This time with a rather sad analogy to that head-in-the-sand abomination of a bird called the emu. The Economic & Monetary Union (EMU) and its plethora of finance ministers, leaders, and bankers appears more and more similar to its aviary analogy. Cembalest notes, Europe’s long-awaited sovereign and bank bailout package will soon attempt liftoff; we will know more after yet another summit on Wednesday. There are flaws that may weigh this emu down, as annotated in the picture below. Why is this so important? Bank recaps in Sweden (‘92), the US (’92, ‘08), Japan (’99) and Asia (’98) were close to marking the bottom of the equity market cycle….but were not designed using the equivalent of the “Goal Seek” function in Microsoft Excel.
And for completeness, Cembalest's framework for comprehension of just how far this can will be kicked based on EFSF, ESM, bank recaps, and Greek haircuts suggests:
The bottom line is that the proposed package appears to just about cover contingent funding needs for Spain and Italy through 2013, assuming that Germany and France recap their own banks and don’t draw on the EFSF to do so; and assuming that T-bills do not need any backstop. IMF participation would further increase the EFSF’s potential capacity. Throwing 2014 into the mix, adding Belgium, or requiring a larger (more realistic) bank recap makes the math more difficult, and results in coverage ratios close to 1.0x. The best scenario is the one where all countries are assuming to return to debt markets in 2013, the 20% first loss guarantee works and the IMF helps out.
Doesn't exactly seem like the can will be kicked far given the magnitude of sponsorship but then the US knows all about financially engineering a short-term solution no matter what the long-term cost may be. We hope the EU leaders heads will emerge from the sand soon enough and in keeping with our discussion last night on whether they really know what the problem is, we hope the addiction of debt as a solution for debt is destroyed sooner rather than later.
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Pea shooter indeed.
FTFA: "we hope the addiction of debt as a solution for debt is destroyed sooner rather than later."
Toxodebtmosis.
Yes, we hope this sick world addiction to EZ quick-fix free money smack can be overcome very soon....but im the meantime....GIVE US MORE FREE SMACK NOW!!
The US will do what it (always) does. Print money and give it to their friends. And just like last time, they are not going to tell anyone about it. Bam! Problem solved.
As long as you obey the little rules, you can break the really big ones.
Forget the EMU
no sacrifice, no hard work, no need to lay it all on the line for something greater...
Not sure, but the problems we face as a global society may run a little deeper than financial markets? It's going to take one nasty crisis to force us to deal with the real issues... Until then, enjoy the ride to the moon!!! I'm sure our world leaders will be able to engineer a soft landing!
Oh, one thing holding up the Euro is the Swiss - how long will they be willing to buy unlimited amounts of Euros as this entire mess comes unglued? Look for the "we give up" announcement from the Swiss shortly, followed by Germany returning to the Mark... tick-tock / tick-tock / tick-tock...
The strong can only hold up the weak for so long! I'm just sayin'
All of this is irrelevant. The EUR/USD is taking off like a rocket again. Ben is probably buying them hand over fist.
This can continue until someone with deep pockets calls the bluff, which will never happen since all the criminals are on the same team.
Modern Democracy:
In Europe, only Merkel's vote counts.
In the rest of the world, only Ben's vote counts.
Behind the Curtain, sabe dios.
EFSF = Euro Fraud Slush Fund
BTW, the picture of the EMU left out one critical component: taxpayers buried under a pile of excrement.
Wow, credit card stocks are going vertical today, check out COF, AXP.
Last week's warnings pretty much shucked off.
Even the crappy solar stocks like FSLR up 6%+
European bank crisis must be over.
i know i've asked you many times before, but i'll try again:
what is the point of relentlessly reporting about what each one of us already sees and knows?
If last week you'd have told us to check out credit card stocks for today, this piece of info would have been pertinent.
It's pertinent if you're a Robot Trader, trading like a robot, high frequency style - which is what Robot Trader does.
Robo is incapable of seeing as far ahead as next week. That's like us trying to comprehend the amount of time between now and when the sun explodes.
Ha Ha, robo defender, lol
Robot Trader is our resident troll EG
I'm not defending Robot. He's part of the problem.
That said, whether intentional or not, he also highlights another part of the problem; most people are thick.
Over (or rather can be safely ignored) for the next 0.2 nanoseconds, Robo. That's forever in your book, isn't it?
Hot money inflows from europe. Dollar up. Gold up. Stocks up. Treasuries up. US bank deposits up. There willmbe a wonderful time to short soon. The timing is key... And yet nearly inpossible to time right:
PumpbotTrader only shows up when markets are up, then he can safely report what has already happened. When markets are tanking, like right after he called for the mother of all rally's at DOW 12,700, he was nowhere to be found for days.
PumpbotTrader.
So are the promised returns on bonds in a number of E.U. countries. By all means, jump right in robo.
Go long sand and cans!!!
SP/Moody/Fitch should just downgrade America, France and Italy some more, let this whole thing collapse already.
http://www.reuters.com/article/2011/10/23/us-usa-rating-merrill-idUSTRE7...
They are...you just keep looking in the wrong places for your news.
Uncle Warren won't stand for this, he didn't give his money to BofA to downgrade his beloved country did he ? Or maybe he has his GoldmanSquid boys frontrunning whatever he decides he's going to do with BofA already...
This Bird Won't Fly Far.
It'll only fly far enough to shit on taxpayers.
Good Lord, this could go on forever if the real truth is kept hidden from the masses actually funding this turd barge. The taxpayers are focussing on the stock market while their pockets get picked.
I really liked the statement comparing ~3% GDP to the eroding value (put value loss here) of the dollar.
Wheeeewhh ………. thought that was the deer in the head lights for a second. All is well.
Damn that bird has some really ugly feet ..........
EMU in headlights
http://www.cra.org/Activities/craw_archive/cdmp/awards/2006/Dinculescu/M...
One of the funniest things I've seen is a group of wild Emus running flat out down a barely used light aircraft runway flapping thier wings furiously.
I imagine they'd seen a Cessna take off and they figured if it can fly, then they should be able to.
Also, Ostriches are the head in the sand type. Emus are the charge at you wildly and kick the shit out of you type.
Trust me, the bankstercrats would far prefer to fight an Ostrich than an Emu. Both flightless, but only one is fightless.
Two months of bears now in a losing position.
NY Composite now clearing to new highs for the move.
The fact that we blew right through that resistance zone shows you how strong the tape is.
Like that Servicemaster commercial.
"It's Like Nothing Happened"
i find you annoying
PumpbotTrader back in his ultra arrogant 'I told you so' mode....last time was when he was scolding 'hapless bears' and even posting his comments from other blogs here about how only fools are not all-in long here at DOW 12,700...
reading robo comments is like watching a dog eat his own vomit.
...twice.
Are you sure the market you see is the market you know? An investing friend of mine told me over the weekend that he's tired of waiting and he is looking for "opportunities" in the stock market in 2 weeks time. I can't stop him from wanting to throw good money after bad. He knows how bad the situation in Europe is but he still doesn't get it.
The magic of the EFSF is its carrot and stick qualities. Its worthless in itself, but daily promises of it are what drives world markets now. Really sick.
Precisely what makes this surreal. No one wants the emperors to be naked.
A market driven by words.......where do the sane fit in?
Small business is dropping like a stone, because those boys and girls don't have access to ZIRP or transferring all their losses/debts to the taxpayers. My friends are looking ahead to the costs of Obongocare. It looks like a complete train wreck for jobs as in massive lay-offs/closures.
from the front of the sludgereport...........
http://www.reuters.com/article/2011/10/24/idUS264245887020111024
vatican calls for central world bank one world currency..............right on schedule i might add. so we see the subterfuge and the real purpose of this "church" . the catholic church will be the one world church as it was intended and planned to be, since its inception.......
Exactly! This EFSF garbage is not intended to solve anything, it is to ensure the Eurozone is tied together as 1 with no possible escape for anyone when they take it down...all about 1 world govt, 1 world currency.
gotcha
I've been trying to tell you that for ages! And they already control nearly every position of importance in DC: TOTUS, Congress, SCOTUS, Administration.
the catholic "church" does not control anything. the only thing the pope runs is his mouth. it is a shell organization designed to be used in the last days. nothing more. nothing less. power is money and money is power. the catholic church finances were taken over by the rothschilds in the 1860's or so........please, i do not wish to hear any false nonsense and disinfo about how the jesuits are running the world etc. i have heard this before and have given it consideration. this information has been weighed in the balances and found to be wanting..........
Duh ... I'm not talking about the "church", but those who control the church. As with any organisation, the guy who is elected/appointed as the spokesperson has very limited power (and only for so long as he holds the position). And don't come back at me with superstitious nonsense about "the last days" ... we've been hearing about that every century (and decade) since religion began! Every generation thinks they are "the last"......
Off topic but I'm guessing from the glitchy nature of the trades in SPY and others, we're going to get one of those nanex article later today. They're using the melt up algorithm again it seems.
Emu's (not eee-moos my american friends) will kick when threatened, or bolt. They're not given to sticking their heads in the sand like an ostrich.
What does that mean in the context of the market? Nothing... just relieved to be thinking about an animal that isn't a bull, bear, .. or ground hog... They've all been useless predictors lately...
Come on giant flightless bird, pupper needs a new pare of shoes.
So much going on in Europe but nothing is happening...
Truth is that socialism cannot be afforded in the absense of economic growth. Germany may be positioned to kick the can a few more years down the road and pretend to cover all pensions 100% going forward but Italy, France, Spain, Portugal, Belgium are done for.
The pension funds are seeing huge redemptions over the next decade. The boomers are exiting the labor force to get theirs. Problem is that there's not enough labor force able to support the increased demand for boomer pensions. I'm focusing on pensions because that is where it they will have to clamp down the most. People honestly believed that paying in over 40 years into a "fund" would assert them the right and the privililege to draw income from for another 20 to 30 years. In theory.. yes in theory that would work as long as growth is "x" and population is "y" and both "x" and "y" don't ever stagnate or worse yet, they decrease for an extended period of time.
Now the entire European financial system is about to blow up. The US system is not far behind. That is what happens when Micky Mouse did the accounting and promised millions of people they could live in the "NOW", they could live happily then, now and ever after.
It's a fairy tale that is coming to an end.
I don´t think that lack of labour force is the problem. The problem is rather to much supply of labour force today. So perhaps retirements will reduce the unemployment problem.
But I think that the need for high stock prices combined with a need for normal interest rates and low inflation is a real problem when lots of people retire. In order to keep the stock prices high enough, real interest must be as low as possible. But pensioners usually prefer bonds and bank accounts to stock. This means that inflation will reduce their assets rapidly. Furthermore, high stock prices due to low interest rates do not increase dividends. Of course, pensioners can sell small portions of their stock gradually. But in order not to lose money timing must be right. Furthermore, more sellers of stock makes it harder to maintain high stock prices.
Perhaps pensioners could be compensated by lower capital gains taxes if the governments can reduce unemployment benefits.
In any case I don´t think that there will be a labour force shortage. That won´t be a problem.
And, no doubt, such an authority would be as infallible and incorruptible as the Vatican itself!
that emu could use a haircut, BiCheZ!
The one world government will be ushered in after the next "unexpected" attack on the financial system that will pawned off on the masses as the real problem. Those of us in the know will be disgusted at the lies but it wont matter. The MSM will repot it, and sheeple will believe it. Did anyone listen to the firemen who described the series of explosions on 9/11, didn't think so.
Ever wonder how much catholic money wall street might holding as ransom?
"No actual EMUs were hurt during the making of this presentation"