EU Goes From Monetary Union To Suicide Pact

Tyler Durden's picture

Via Peter Tchir of TF Market Advisors

As alleged details are leaked about an alleged proposal to leverage the EFSF all I can do is cringe. I'm waiting for some actual details, but as far as I can tell, Europe is attempting go all in. It is going to make leveraged bets on itself. If it doesn't work, the senior debt holders will own Europe if the BRICs buy the senior tranche and will end in a fast and furious death spiral if the senior tranche is owned by the ECB or European banks. We may get a lift on the news. We are trying to rally on the back of the news right now. But if this plan goes ahead, even the slightest cold in the future will turn into the plague. There will be no strong countries left as they will have tied themselves to the PIIGS anchor with a Gordion Knot that will never be untied in time.

Haven't they seen what happens to SIV's? Are the so confident in an economic recovery that will risk it all at this time? If they get it wrong and it doesn't work, there will be no fall back.

All I can hope is they are tired and too happy with the late night "solution" and the markets initial reaction that after the initial euphoria, cooler heads, like Schaeuble, will prevail. This has the makings of an Epic disaster in the making.

The plans to ring fence Greece, to erect support for banks and other countries all made sense. Painful, but made sense. If this even manages to avoid pain, it ensures the next crisis won't be manageable.

I do like the idea that the EFSF is going to become an "investment bank". At least it is consistent with solving every problem with more of the same.  The best part will be when they pay up to poach talent from the banks that they are bailing out. With Gardening leave in Europe it should take about 6 months before the first employee can start.

I will take a look at the details but in meantime, for first time in this crisis, am worried that not only are they doing something that won't work, but something that will make the problem intractable and ensure that the crisis ends worse than anything we had post Lehman.

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fyrebird's picture

It's the pirates' motto: one hangs all hang. Good to see plundering Europe returning to its roots.

sqz's picture

This and any other similar proposal is a terrifying solution. It is basically leverage on kicking-the-can, tying the fortunes of the structurally and nominally strongest to the dregs of the EU, increases the systemic impact of shocks and imbalances of any kind, and provides no incentives at all for the primary beneficiaries to restructure themselves, but continue with more of the same.

I never thought it would happen, but for the first time I'm actually sorry for the hardworking and frugal German people. The pain and changes that will ultimately be coming to your lifestyles will be an enormous shock. Unfortunately, the solution your government will have accepted will take all the rest of us down with you too.

trav7777's picture

show me a society that didn't plunder.

MarketTruth's picture

The last official act of any government is to loot the country/nation.

JW n FL's picture




A Government Loots the Nation the Entire Time..

The Last Act! is to take the Last of the Money / Wealth that a Country has to offer.

and it is not the Government.. it is the Lobby / Money Behind the Government.


Corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.


The only reason that America Owes Debt off shore is so that Banks on shore can collect fees..

So that the Share Holders of the Federl Reserve Bank can collect 6% on every dollar printed into circulation.

If America owed the Federal Reserve Bank $14 trillion in printed monies America would simply Not! pay the $14 Trillion.. so the debt has to belong to someone else other that ourselves.

The Fact that America has a 120% +++ amount of leverage on every U.S. dollar verse say the Chinese 1,200%+++ Leverage.. means that "We the People" are Transferring over 1,000% of our Wealth to China with every dollar they are allowed to invest into a U.S. Treasury (or other).

This is the biggest scam going and because the Value of the Yaun? is undervalued.. says Cable News in Heavy Rotation / 4 times an hour.. makes it so?

China services its debt or leverage on its Yaun / Renminbi thru production.

7 to 12 Cities a year are built that NO ON LIVES IN! and this is how China services its debt.

and the dumb ass people of America buy the story because it is repeated and repeated over and over again making China's Dollar "Strong like Bull!"

China's dollar is SHIT! and all of these Government Plants and / or STUPID Parrots should be rounded up and shot for Treason.


1. the Federal Reserve Bank that is OWNED by its Share Holders.. which are! Wall Street Brand Name Banks! are looking to gauge how much further they can push before the breaking point. And as dumb as the Populace is! I say they could bend things around Pluto and back more than once, without fear of upsetting the napping "Sheepish Consumers".

2. Wall Street communicated or transferred or moved ATLEAST! 11 Million manufacturing Jobs to China.

3. Wall Street which owns the Federal Reserve not only allows but promotes China's buying of America's debt with a Yaun or Renminbi that is Leveraged at over 1,200%.

4. The U.S. Dollar is Leveraged ATLEAST to 120%.. So China is picking up a 1,000% at par pricing plus, PLUS!!! Interest! FUCK YOU!

Now if this shit ain't Treason against the Sheepish Consumers of America! I don't know what the FUCK YOU COULD CALL TREASON THEN!




They all have to go... the system is corrupt and one man can NOT save it.. only "We the People" can bring back the rule of law..

Wall Street has NO LAW! and No Sworn Law Enforcement is capable of really putting in an honest day's Work!! and harassing poor people while Wall Street Steals Trillions and Washington DC send a HUGE portion of our Tax Base to China for Lobby Dollars does NOT COUNT!!

$16 Trillion Dollars???


Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans


SEC Covering Up Wall Street Crimes?


How about the $2.5 Trillion in Social Security Bailouts??

here is the latest!

A former vice president for Citigroup pleaded guilty Tuesday to embezzling more than $22 million from the company and funneling the money to his personal bank account.


narnia's picture

there's no real enforcement mechanism on this.  if someone tries to march into greece or italy or spain with a piece of EU letterhead paper to take over a water system or land...  he or she going to be met with a bullet or a torch or a guillotine.

the EU is backed by nothing, just like the Federal Reserve Note is backed by nothing.  

this is a con job.  exchanging worthless for worthless with whipped cream & a cherry on top is not a solution.  this is just a means of defaulting via inflation rather than deflation & hope to get a little more out of this stupid system.



SheepDog-One's picture

I dont see the Germans just shrugging it off and allowing this.

gmrpeabody's picture

They will be sharing the same pain that the average tax paying, money saving, payment making,working American will be feeling. IMO

CompassionateFascist's picture

Ultimately, there are just three ways of dealing with runaway debt (Us + EU):

1) Pay it off. Not going to happen, given power of mass group entitlements and pluotocrat special interests.

2) Default. Not just yet, when you can still

3) Extend the Universal Ponzi by piling on more debt/funnymoney. Until you get....back to #2, with a far more destructive Crash. Probably summer 2012, which will co-incide with run-in to US elections, for an econo-political Perfect Storm.   

Buck Johnson's picture

This is a horrible idea, truly horrible.  When this finally implodes, it will take Germany and France and even Britian with it.  As you said, they tied the stronger economies to the anchor of the insolvent ones.  There thinking is if they go down we all go down.  The problem is that when the person or persons said that they didn't believe it would happen, this time it will happen. 

Mr_Wonderful's picture

Yeah, good point.

In our time European mafia dumping toxic waste off the shores of failed states sans government control like Somalia destroys the livelihood of fishermen thus turning them into pirates. Unchecked criminally dysfunctional behavior breeds more of the same obviously.


TruthInSunshine's picture

"When you multiply one piece of dog shit by a much larger number it becomes an edible, nutritious & delicious delicacy."


--ECB Proverb

Forgiven's picture

Once formed, the new SPV will be called EURON.  Recycle the Enron logo, but with the euro format e.

Forgiven's picture

Williambanzai7 can really go nuts with this trick of theirs.

Forgiven's picture

Euron - The Doomsday Weapon SIV/SPV - You could really get a lot of play out of that imagery.

Gene Parmesan's picture

Beautiful. They don't even need to replace the n with a u, they can just flip it over.

Piranhanoia's picture

The currency can be the Eurine.  

TruthInSunshine's picture

And the Germans and any other solvent Europeans cry out "Don't piss on our heads and tell us it's eurin."

TruthInSunshine's picture

Forgiven - "Once formed, the new SPV will be called EURON.  Recycle the Enron logo, but with the euro format e."


It should carry the 'Ask Why' motto that Enron utilized, also; very appropriate:


Enron Commercial - Ode To Why
sqz's picture

€URON™ - "Ask Why, Germany, Why?"

Deadpool's picture

I said on another post, it's a hit not a suicide pact (and I meant it). The Fed or china will come out with all the EU gold and that's check mate. there will be blood.

SheepDog-One's picture

Right, did people really think China was buying Euro debt because theyre such nice and generous guys?

trav7777's picture

they can certainly roll some gold into this CDO if they want to find least it then has some recovery value lol

wombats's picture

A suicide pact?  I guess that's about what we should expect from the mind numbed mental midgets of the EU leadership at this point.

Can I have the Eifel Tower after they go bust?

Henry Chinaski's picture

You say that now, but it's all fun and games until the Grand Canyon goes up for auction.

SheepDog-One's picture

Suicide pact indeed...Europe is now like a Mission Impossible team, if one gets caught then everyone bites the cyanide capsule hidden in their tooth.

Yea this should end well...sure.

wombats's picture

I can't help wondering if Ben and Tim have secretly bought in on this pact?

Where is Goldman?  Surely they have fingerprints on this one too.

Ghordius's picture

"Europe is now like a Mission Impossible team, if one gets caught then everyone bites the cyanide capsule hidden in their tooth"

Like the TBTF 4/25 banks and their web of derivatives?

It starts to look like a surprising experiment of institutional psychology.. long as I am not alone it's all right..

Nascent_Variable's picture

Right now, there is a man in Germany shouting to a crowd in a beer hall about irresponsible foreigners bringing the once-prosperous country to ruin.  Most people are laughing, but some are listening.  A short time from now, when he and others like him are proven to be right, and Germany's economy is in shambles, we'll find out if history indeed does repeat itself.

fyrebird's picture

All true, except it is an out-of-work factory worker in Detroit doing all that.

The Germans know better. They'd kill that guy in an alley the next day. Americans, not so wise.

But we'll learn. Oh yes. Come back in 15 years and see how much we've learned.

trav7777's picture

uh...about the only people left in detroit are black

lynnybee's picture

you forgot all about the large iraqi population in DEARBORN.     i live on the other side of the state of michigan.    the stories that i hear about DEARBORN garages .......... slaughtering & the bleeding of goats in suburban garages in DEARBORN, MICHIGAN so they can eat them.     Can't they just go to the grocery store ! ?    ......... no, it's NOT ALL BLACK in the DETROIT area.     BUSH certainly did a nice job assimilating iraqi population & showing them what democracy was all about.    people on the west side of MICHIGAN don't even dare go to that area.

TruthInSunshine's picture

I'm not weighing in on the whole ethnic/religious/political aspect of what you wrote, as I restrain my comments on ZH and elsewhere to economic matters, however...

...if you eat meat, the animal does have to die first, and in most parts of the world, it's done precisely this way.

Of course, we have automated turnstiles that decapitate our cattle and hogs on Big Agra Factory Farms now, except when the blades miss the mark (as they often do) and just lop off the snout or some limbs.

caconhma's picture

In spite of all the post-WWII propaganda, looking at old documentaries, one can see that German people indeed loved A. Hitler. Apparently, he has done some good things for Germany and German people.

Yes, the NAZI Germany has lost the WWII. Consequently, Hitler was responsible for the WWII defeat since, after all, he was the NAZI leader. No doubts, he was poorly educated and has made many serious strategic mistakes.

Once again, (the involvement into and the execution of WWI and WWII) Germany makes a terrible geopolitical blunder. The only good thing for Germany is that they will not have a war on two fronts since Russia is close to a collapse.

Unfortunately, for the last 300+ years, England has been the primary force responsible for the endless European wars. It is of interest that Hitler tried to make peace with England but Stalin has always considered England as his number one enemy.


Peter K's picture

You think The Feuher might have gotten a bad rap since the end of the "you know what"? Just askin.......

macholatte's picture

Who knows what to believe anymore. The EU & IMF have become really bad propaganda machines. They publish semi-positive BS Mon-Friday that gets contradicted Mon-Fri while they have a crises on the weekends or whenever NYSE is closed. If the Swiss weren't holding up the Euro it might be eighty cents by now. Are they actually looking to the BRIC's for financing? Isn't that like Russia and China conquering EU simply by buying it? I can see Putin riding into Paris, through the Arch de Defeat, standing in a convertable while the crowd cheers. The only problem for Russia and China is all the Europeans. But maybe they have some ideas on dealing with that issue.   JMHO

dr.charlemagne's picture

Attention KMart shoppers. Silver clearance sale ending soon.

Hero Protagonist's picture

In the US we look at the ratio of Debt Service to Tax revenues.  I wonder what is the equivalent in Europe...that is, the sum of each countries debt service versus the sum of each countries tax revenues.  The last time I looked in the US it was +/-300 B debt service to +/-2 Trillion in tax revs.

Hansel's picture

"I'm waiting for some actual details, but..."

LOLZ, wish in one hand and shit in the other.  Rumors are much more effective without details.

SheepDog-One's picture

More daily rumors of a 'new plan'...they probably have NO clear plan at all, as they realize putting out the carrot and stick daily is far more effective than any actual plan or solutions.

Mugatu's picture

It's that damn Hansel! He's so hot right now.

Peter K's picture

I guess deperate times demand desperate measures. But the glaring thing about this is the degree of the deperation:))))They have really deluded themselves into thinking that the world will end if they don't save the Euro. Mind boggling!

carbonmutant's picture


If this bank collects most of the bad EU paper it could be used as a bad bank.

oogs66's picture

They are all already bad banks this would be worst bank.

youngman's picture

They still have not fiqured out who will buy it and who will rate least now its know the Greek bonds you are buying are they will hide it....and one more item...when the governments find out that they can get more money...are they going to cut expensies or just use more will triple their debt overnight.....what a joke..and Gold and Silver are Econ 101 has failed me with this...there is no sanity in the markets anymore...

adr's picture

And 11,000 gets broken again. Seriously adding all the ups after the downs of the past two months probably add up to over 10,000 points. The entire history of the Dow in a month.

I guess we'll see 11,500 by Wednesday and by the following Wednesday 10,700 will come again.