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Euro Jumps As US Taxpayers Are Latest Source Of European Bailout According To Freshest Set Of Bailout Rumors

Tyler Durden's picture




 

FT, Liesman and now the IMF (aka US Taxpayer). Rinse repeat. The program for the spin cycle to keep the EUR afloat, and Europe bailed out on any given day ending in -day is now clear as day. After last night's FT rumor for yet another comprehensive bank bailout program was promptly digested and rejected by the market with the EURUSD recouping all losses, it is now the IMF's duty du jour to protect the doomed currency, naturally with other people's money, in this case America's middle class. And in a flurry of headlines, we find that the person tasked with destroying his credibility, after the market no longer trusts anything Lagarde says, is IMF European Department Director Antonio Borges who according to Reuters, said that Europe needs between 100 billion and 200 billion euros to recapitalize its banks to win back investor confidence and should carry out the plan across the continent, not in a staggered process. He also confirmed that other European bureaucrats lied yesterday when they said no recap plan was being considered after saying that, well, "EU officials are working on a European bank-recapitalization plan." Said otherwise, US taxpayers to the European rescue because the EUcrats can not get their imploding house in order. But, but, whatever happened to China?

Yet surely he is credible, when everyone else isn't. As to his imaginary number of just €200 billion needed to rescue Europe, here is what he had to say: "We are talking about figures of between 100 and 200 billion euros, which in our view is very, very small compared to the size of the European capital markets and compared to the resources of the new, enhanced EFSF," Borges also said the IMF would "definitely participate" in a second bailout package for Greece if the Washington-based lender was happy that the country showed it was willing to solve its debt problems. "If there is a second program for Greece, which is the expectation, I think the IMF will definitely participate on the condition that we remain convinced that Greece is on track and the right policies can be put in place, that debt can become sustainable," he added.

But the scariest news for US taxpayers, who are the primary funders of the IMF, which as we reported recently is planning on expanding its "bailout firepower" to $1.3 trillion, is that the IMF could "if needed" could create an SPV to buy bonds of Spain and Italy in both primary and secondary markets alongside the EFSF. In other words, the US taxpayer would become Europe's Bernanke, to avoid a German revolution protesting precisely such behavior from the ECB. WE can't wait to see what the domestic response is once the "99%" learn about this.

Oddly enough, this bottom scraping rumorflow is enough to send the EURUSD up 70 pips as can be seen below.

The problem with all this is that unless EUrocrats want a public rebellion both in the continent and in the US, they will have no choice but to stick with the only form of TARP available to them: the EFSF. And while EU may be only now thinking of recapitlaizing its banks, Nomura already did it for them and came to the conclusion that unless the EFSF is expanding to many trillions, it just can't be done. So unless Germany has diametrically changes its position in the last 24 hours and we are not aware of this, it is tie to once again fade all this total and utter BS.

 

 

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Wed, 10/05/2011 - 06:45 | 1740460 johnnymustardseed
johnnymustardseed's picture

Shit, bailout Europe.  There will be blood in the streets

Wed, 10/05/2011 - 17:18 | 1742931 max2205
max2205's picture

Makes cents: get the 'money' from the country that gives a shit less (USA)

Wed, 10/05/2011 - 06:46 | 1740462 3rivers
3rivers's picture

can anyone comment on whether the Fed might stop paying interest on excess reserves?  and why this deos not seem to be discussed by anyone?  except me? 

Wed, 10/05/2011 - 06:55 | 1740475 Moe Howard
Moe Howard's picture

There is so much else, people can't focus. Our government at the highest levels supplying guns to drug gangs, giving them a free pass to sell as long as they kill the other gangs who don't launder their money at the right bank, etc.

The government is one giant criminal conspiracy. The middle class is the victim.

Wed, 10/05/2011 - 06:59 | 1740481 g speed
g speed's picture

Bingo

Wed, 10/05/2011 - 07:03 | 1740490 g speed
g speed's picture

Oh yeh -- one other thing--bring it to justice and-- let the punishment fit the crime

Wed, 10/05/2011 - 10:58 | 1741343 Problem Is
Problem Is's picture

Justice??
Eric "Empty Suit" Holder is Rip Van Fucking Winkle...

Wed, 10/05/2011 - 06:57 | 1740478 GoldBricker
GoldBricker's picture

Check out Gary North's old columns. He has pointed out that this is almost the only thing (besides lack of willing and able borrowers) keeping those bailout billions from flooding out into the economy.

Another reason is that it's a sneaky form of free money to the banks, aka 'recapitalization'. I lend you a dollar at 0%. You park it with me at, say 1%. Now add a lot of zeros and you have the idea.

Wed, 10/05/2011 - 06:47 | 1740463 drwillia
Wed, 10/05/2011 - 06:47 | 1740464 papaswamp
papaswamp's picture

One would think if it takes both the ESFS and the IMF to bailout...again...that perhaps this won't work..again. People of the world to be slaves to the banks....fo eva bitchez!

Wed, 10/05/2011 - 06:47 | 1740465 Josephine29
Josephine29's picture

Remember also it is only a week until the Federal Reserve comes over the horizon with its 3 month US dollar swap lines for European banks as explained below.

The US Cavalry is only a week away whilst UK GDP growth is a poor measure of anything 
Wed, 10/05/2011 - 06:48 | 1740466 Fips_OnTheSpot
Fips_OnTheSpot's picture

Silver/Gold crashing on that - time to stockpile some more bullions :-D

Wed, 10/05/2011 - 06:53 | 1740471 Moe Howard
Moe Howard's picture

It's a falling knife, and the high premiums and non-availibility in many shops make it harder, but I am buying what I can when I can.

Wed, 10/05/2011 - 07:00 | 1740484 Fips_OnTheSpot
Fips_OnTheSpot's picture

Just like 2008 - maybe silver goes down to 15USD/oz - I _do not care_ as long as physical sits in my safe. I just wonder how long they can overstretch this Muppet Show and in what currency I'll go for Xmas-shopping.

Wed, 10/05/2011 - 06:52 | 1740470 Moe Howard
Moe Howard's picture

Remember, they have been bailing out Eurobanks all along. AIG was used as a funnel for billions to Eurobanks, plus the trillions the so called Fed gave them interest free.

It is a continuation of the game, nothing more.

Wed, 10/05/2011 - 06:53 | 1740472 Sudden Debt
Sudden Debt's picture

 

 

I was talking to a guy in the gas station and he said all will be fine and that it's the media who is blowing thing out of proportion.

I don't know who he was, but it's possible he worked for the IMF or Europarlement because he was in a suit.

He also said that it might start to rain for a few days in Belgium and that the summer is really over now.

 

Wed, 10/05/2011 - 07:06 | 1740494 Byte Me
Byte Me's picture

That was a tankstelling selling Yahoo unleaded?

At least he seems to be right about the weather..

Wed, 10/05/2011 - 08:20 | 1740497 GoldBricker
GoldBricker's picture

Yes, this fits my experience in Belgium as well. People won't believe that anything is really wrong until it punches them in the face. The current candidate for that is the Dexia fiasco and the possibility that local government will have to lay off some people (Dexia is the banker for Belgian local governments). When I mention this possibility to people here, they say "Oh no, impossible! The law says...etc."

So far they've been right.

Wed, 10/05/2011 - 06:55 | 1740474 LookingWithAmazement
LookingWithAmazement's picture

European banks are being saved. Stocks rise, PMs down. No Armageddon. Remember that collateral for Finland, supposed to be a roadblock for the saving of Greece? Though the collateral is completely unattractive, but the Finns agreed to it. Paper tigers. Even the True Finns remain silent, have no influence. Problem solved, euro saved. All obstacles are being cleaned up, so we're heading for Christmas. No troubles anymore, enough money to save many times. No collapse. Boring world we live in.

Wed, 10/05/2011 - 06:55 | 1740476 jomama
jomama's picture

rumors are all it takes to make markets, obviously.

Wed, 10/05/2011 - 07:06 | 1740495 YHC-FTSE
YHC-FTSE's picture

Headline should read: "Captain Insano and his sidekick Gossip Girl rescues the markets." 

Wed, 10/05/2011 - 06:58 | 1740479 Minoan
Minoan's picture

Forget everything you have learned.

Greek statistics-a troll synonym

http://english.capital.gr/News.asp?id=1297525

4th year of recession and still standing...

Wed, 10/05/2011 - 06:58 | 1740480 johngaltfla
johngaltfla's picture

An ancient Chinese proverb comes to mind:

 

"Never build your home's foundation on bullshit"

 

I think that applies to base formations in markets also....

Wed, 10/05/2011 - 07:00 | 1740482 Silverhog
Silverhog's picture

Recapitalization = printing presses    Yet Silver & Gold are papered down to greet the new rescue. BTFD

Wed, 10/05/2011 - 08:48 | 1740737 tmosley
tmosley's picture

Paper gold and paper silver fall.  Perhaps they will print more of these products and sell them onto the market to pay for the recapitalization of Europe.  Kill two birds with one stone while fucking over those stupid enough to buy paper PM products AND providing smart people with a lower price for physical (assuming they can find any for that price).

Wed, 10/05/2011 - 07:00 | 1740483 shortus cynicus
shortus cynicus's picture

Only devastating alien invasion can save Europe.

Wed, 10/05/2011 - 08:19 | 1740576 GoldBricker
GoldBricker's picture

We do have aliens arriving by the thousands every day. The problem is that 99% of them are poor and unskilled. Plus we already have plenty of poor, unskilled natives. Everyone here wants the welfare state, but without thinking through the logical implications.

Wed, 10/05/2011 - 07:01 | 1740485 Schmuck Raker
Schmuck Raker's picture

" But, but, whatever happened to China? "

They will be bailed out by Nauru.

Wed, 10/05/2011 - 07:06 | 1740493 israhole
israhole's picture

I don't believe ZeroHedge.  Bernanke has said many times that he has a strong dollar policy. hahahaha

Wed, 10/05/2011 - 07:13 | 1740505 Thought criminal
Thought criminal's picture

To hell with manufacturing/service/resource based economies - the most efficient is obviously a rumor based economy.

Wed, 10/05/2011 - 07:40 | 1740568 Cassandra Syndrome
Cassandra Syndrome's picture

Nurtured by auxillary industries such as Press Conferences, Telephone Conferences and Emergency EU Summits over weekends, financed by printing presses. I think we've got the real deal going here. Bless!

Wed, 10/05/2011 - 07:17 | 1740510 ziggy59
ziggy59's picture

ITS OPM-Day..

 

 

Other Peoples Money

Wed, 10/05/2011 - 07:26 | 1740527 El Gordo
El Gordo's picture

To quote Charile Brown "Good grief."

Wed, 10/05/2011 - 07:35 | 1740534 NuYawkFrankie
NuYawkFrankie's picture

The US Taxpayer bail out Europe?

Ha! Thats a good one!

Let's get one thing straight: the US Taxpayer couldn't bail out a shopaholic 7-year-old thats been on a splurge in a Five 'n Dime store - not even if Warren threw in an extra $5 a week! LOL!

The US taxpayer is B-R-O-K-E just like the USA

Besides any IMF Bailout would just be a roundabout way of bailing-out the counter-party US banks - a well-worn road, I'm sure you're familiar with - and keeping this sorry charade going a little while longer

Wed, 10/05/2011 - 10:52 | 1741317 MrSteve
MrSteve's picture

Yanky Frankie, you forgot the printing press can do bonds as well as cash, ie the debt which is monetized.

The Bernank testified only yesterday that US banks had very minimal, manageable exposure to Euro banks, so NO PROBLEM, we have lending power to spare for their borrowing needs.

The real deadline for all this is November 2012, then we get a whole new can to kick around.

As long as the dollar is an idea, we can keep having more of them for free. Everyone wants more of them, except pesky gold bugs who seem to be on to something crazy.

Wed, 10/05/2011 - 07:28 | 1740535 El Gordo
El Gordo's picture

Who is left as a prospective groom after this one fails to show up at the alter?

Wed, 10/05/2011 - 07:38 | 1740564 MsCreant
MsCreant's picture

Mike sang a song to a Rat once.

 

Ben, 

 

You're always running here and there

You feel you're not wanted anywhere

If you ever look behind and don't like what you find

There's something you should know, you've got a place to go

(That would be hell).

Ben, the printer of last resort, bank on it. Guttenberg would puke in his grave.

Wed, 10/05/2011 - 07:32 | 1740550 MsCreant
MsCreant's picture

STOP GIVING THESE ASSHATS MONEY. LET FAILURE FAIL. LET BAD DECISIONS HAVE CONSEQUENCES. RESTORE DISCIPLINE-- STOP SPENDING-- ONCE THE BANKRUPTCY IS COMPLETE. 

This is not that hard to understand. Not only is the top 1/1000 (worse) being allowed to control all the world's wealth, when they have spent it all, they are being given more. You would not do this with a kid. You would not do this with your crackhead brother.

Wed, 10/05/2011 - 08:15 | 1740632 Miles Kendig
Miles Kendig's picture

This is why the once proud pink sheet [the FT] is now known as the pink rag.

Perhaps the owners and editors of the FT should consider moving on up to the high standards of journalistic integrity set by The News Of The World.

And those sorry fucks have the nerve to call Zero Hedge lacking...

MsCreant, you know when the tide is changing by observing that the dissidents become the forces of order while the forces of order become the anarchists.

Wed, 10/05/2011 - 10:08 | 1741137 MsCreant
MsCreant's picture

"you know when the tide is changing by observing that the dissidents become the forces of order while the forces of order become the anarchists"

Really good observation. Hope you are well and the car is fixed.

Wed, 10/05/2011 - 07:35 | 1740556 twotraps
twotraps's picture

Politics.  Think about it....people can't imagine how the world got into this mess..........Like it fell from the fucking sky or something!   The Euro is a totally politcial construct, it was not formed out of economic necessity or urgency.  Politics.    The Euro and associated problems are no different than govt. pensions/broke states/US govt debt/unprecedentted govt involvement in business.  

 

Politics.

Other than the i-phone from AAPL, one shrewd move in the past 20 yrs has been the by the Union to recruit govt workers.  That has been the fastest growing part of the group.  Why so shrewd???  Direct govt deposit of money/fees/dues.  No payout or other economic decision by the govt HAS ANY REAL ECONOMIC CONSEQUENCE.  All the 3 dimensional math models aside and cross/cds/rate swap backflip agreements aside,, its not complicated.  Political involvement in economics is a disaster, at our expense.

Wed, 10/05/2011 - 07:38 | 1740565 Quinvarius
Quinvarius's picture

Bernanke is already feeding those banks trillions in 0% loans that will never be paid back, just like last time.

Wed, 10/05/2011 - 07:40 | 1740569 DosZap
DosZap's picture

 Said otherwise, US taxpayers to the European rescue because the EUcrats can not get their imploding house in order.

US taxpayers will provide relief only for property rights in Greece,since we are mor broke than they are, we need a place to move to.

To date, I have seen NO ONE coming to our rescue,except the chinese, and Japanese, simply because we are their ECONOMY.

Ready to hand over the reins to the Reseve Currency, as all it means is we get the tab for it all.

Wed, 10/05/2011 - 07:40 | 1740570 Cassandra Syndrome
Cassandra Syndrome's picture

And down again. Motion Sickness bitchez

Wed, 10/05/2011 - 07:41 | 1740572 jmcadg
jmcadg's picture

My bad, just ranted about this on the next post. Bend over Borges, I have a baseball bat for you.

Wed, 10/05/2011 - 07:45 | 1740583 Dingleberry
Dingleberry's picture

The word you are seeking is "swaps"......Uncle Ben won't let the EU breathren drown.  He will take shitty "AAA" collateral on the Feds books.

Wed, 10/05/2011 - 07:53 | 1740601 Börjesson
Börjesson's picture

The US Taxpayer? C'mon, Americans don't pay taxes. Everyone knows that!

If the US is going to bail anyone out, then it will have to be with newly printed funny money.

Wed, 10/05/2011 - 07:54 | 1740602 BlackVoid
BlackVoid's picture

No, Europe will not be bailed out by US taxpayer money. The US taxpayer has no money, only debt.

Europe may be bailed out by freshly printed FED dollars.

 

Debts will never be repaid.

Wed, 10/05/2011 - 08:20 | 1740656 chindit13
chindit13's picture

Unless I have this wrong, it seems Germany has said "no" to the bailouts being an intramural affair, so the US has to fund not only its own profligacy, but that of Greece, Italy, Spain, Portugal, etc. as well.  I guess Japan has to pony up, too, though to a lesser extent.  Bond investors get another coat of teflon while we're at it.

Then Bernanke opens up the swap lines, which are "fully collaterized", which means Ben will be taking Greek Sovereign paper and Dexia LT paper to hold on our behalf.  Then when the ECB cannot close the swap lines, meaning they refuse to print euros to get the dollars back, Ben will be left with Pap's and some Walloon hooker's phone numbers, and little more.  Of course, the IMF might step in to cover the losses, which is to say 40 cents on the dollar will fall on the US taxpayer.

The first political candidate who raises this issue---with the Wall Street protests this would now resonate---gets the keys to 1600 Pennsylvania Ave (plus he assumes the HELOC Obama took out).

Wed, 10/05/2011 - 08:28 | 1740672 falak pema
falak pema's picture

oh the incestuous financial world :

ROBERT REICH: Behind Europe's Debt Crisis Lurks Another Giant Bailout of Wall Street

Read more: http://robertreich.org/post/11033625495#ixzz1ZuSlC2Iy

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