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Eurobonds Ruled Out; Eurobong Still In Play

Tyler Durden's picture


Not even minutes after we finished ridiculing Springer/Die Welt's attempt at propaganda spin whereby eurobonds were actually presented as not only good for Germany, but about to be "instituted" (and fully expected the immediate response to be one of refutation via official channels), here comes the FT with the official denial: "Germany and France are ruling out common eurozone bonds to solve the bloc’s current debt crisis, in spite of renewed pressure ahead of a meeting of chancellor Angela Merkel and president Nicholas Sarkozy on Tuesday. Wolfgang Schäuble, German finance minister, made clear in an interview with Der Spiegel, that Berlin remains opposed to such a policy. “I rule out eurobonds for as long as member states conduct their own financial policies and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity,” he said. So, uh, Die Welt's prognostication that "The federal government is now willing, if necessary, to accept a Eurobond transfer union" is about, oh, 100% wrong? Oops. As for those expecting an announcement of a eurobond on Tuesday following the latest round of "emergency" Merkel-Sarkozy, we suggest you put down the Eurobong: "Senior French officials also played down speculation that any firm announcement on jointly issued bonds would be issued after meetings when Ms Merkel comes to Paris on Tuesday. “Eurobonds would require a much more determined integration of budgetary policy,” one said. “We do not have that today. It could be a long-term project, but you cannot have eurobonds and at the same time national economic and budgetary policies.” Translation: "there is this thing called elections coming, and some of us career politicians, who have no idea how to do anything actually valuable for society, and still have not plundered enough in the form of bribers, pardon, lobby money, are not insane enough to propose that German and France foot the bill for the entire European bailout." Even though that is precisely what they will do via the EFSF. And we certainly expect yet another round of eurobond rumors the next time the EURUSD tumbles by 200 pips in the span of 10 minutes (which courtesy of the broken FX market as described by Sean Corrigan earlier, is roughly every several hours).

More from the FT:

George Osborne, the UK finance minister, on Thursday said the idea now required “serious consideration”, while billionaire investor George Soros warned on Friday that the euro “could implode” if eurozone leaders failed to accept the principle of mutualising debt.


Yet Ms Merkel and Mr Sarkozy are on Tuesday expected to reiterate the need for greater fiscal and economic co-operation before any European bond can be considered.


Nonetheless they hope to reassure markets by flagging a common determination to implement the measures agreed at the last Eurozone summit on July 21 where members agreed a new round of emergency crisis measures.

As a first step, Paris is hoping to make real progress on proposals to improve the governance of the eurozone.


One official said the idea would be to push forward economic and fiscal integration, but also to improve the “institutional architecture that allows us to take decisions.”


For President Sarkozy, still deeply unpopular in the polls and facing a difficult re-election campaign next year, it will be important to come out of Tuesday’s meeting with concrete progress. Mr Sarkozy has already sought to reassure markets – and his German partners – on France’s determination to get public spending under control after last week demanding that his government come up with new deficit reduction measures by this week. There was speculation at the weekend that Ms Merkel and Mr Sarkozy could even announce some new measures for further fiscal co-operation between their two countries.


But officials close to the German chancellor caution against expecting any major initiative from the talks. They insist that the meeting will focus on proposals for long-term reforms of eurozone governance, and not on short-term measures to calm the markets.

In the meantime, as to what the true endgame is, we go to Reuters, which informs us that 54% of Dutch votes now want Greece and all the PIIGS thrown out of the Eurozone, rather than be rescued.

Recent opinion polls have shown that Dutch taxpayers are increasingly disenchanted with the enormous financial cost of rescuing euro zone members, views which could well influence parliamentary debates this week and affect parliament's support for such bailouts at a key vote due in October at the earliest.


The poll followed another week of financial market turmoil, in which France's triple-A credit rating came under scrutiny and the European Central Bank had to step in to buy Italian and Spanish sovereign bonds in a bid to restore stability.


A Maurice De Hond poll published on Sunday showed that 60 percent of those surveyed wanted the Netherlands to stop lending money to other euro zone countries. A week ago, 55 percent said support should not be extended to Spain and Italy if they needed it.

Just under half, or 48 percent, said the euro's negatives outweighed its benefits.


A separate poll, commissioned by Dutch newspaper AD and published on Saturday, found that 48 percent of those questioned wanted out of the euro and a return to using the Dutch guilder.

Naturally, complying with the will of the people, a concept so alien to modern day "democracies", it flies right over everyone's head, would mean that the eurozone would be disbanded yesterday. It would also mean that an entire generation of European apparatchik bureaucrats has been wasted. Which won't happen, because while the status quo in America is defined by the banking interests, in Europe is the various petrified bureaucracies that define the here and now. Not until the MENA revolutions migrate across the Mediterranean do we expect anything notable to occur in Europe. In the meantime, we fully anticipate that Chinabot and the various vacuum tubes, to lift the EUR on increasingly fewer optimistic headlines that have not been recycled already (or if they have, then at least have been out of the robots' view for more than a few nanoseconds: enough time for the latency cycle in ORNAND memory to fully forget what a given memory cell held in it just prior), even despite the admonitions of Citi's William Buiter who claims that the end result of this whole European insolvency exercise will be a far stronger euro (see below).

Good luck with that.

Buiter August 12


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Sun, 08/14/2011 - 18:50 | 1559938 Buck Johnson
Buck Johnson's picture

They want Eurobonds because they can stall and put the debt into another vehicle that they won't be responsible for, only Germany and France will.  This is getting to be a massive shell game.

Sun, 08/14/2011 - 18:57 | 1559953 magpie
magpie's picture

Maybe some EFSF lite coverage for Spain and Italy; a basic mechanism / sleigh of hand to transfer debt between the fund and the ECB in the meantime. Anything else would be too expensive and would require something parliamentary which everyone seems to wish to avoid these days.

Sun, 08/14/2011 - 21:25 | 1560256 spiral_eyes
spiral_eyes's picture

Dey schmokin' dat good shit in Europe:

motherfuckin' paper g. schmoke dat motherfuckin'' toxic paper 'til you get emphysema and 'til your fucking lungs collapse.

Sun, 08/14/2011 - 23:41 | 1560553 StychoKiller
StychoKiller's picture

George Soros warned on Friday that the euro “could implode” if eurozone leaders failed to accept the principle of mutualising debt.

Translation:  "C'mon, pour a little gasoline on yer head, ALL the cool kids are doing it!"

Sun, 08/14/2011 - 18:51 | 1559941 ISEEIT
ISEEIT's picture

Watch EUR/USD bust 1.43

That's how it works.

Sun, 08/14/2011 - 18:55 | 1559952 cossack55
cossack55's picture

I have never seen a EuroBong, but, needless to say, I am intrigued.

Sun, 08/14/2011 - 19:04 | 1559975 carbonmutant
carbonmutant's picture

If it's like the American ones it Sucks...

Sun, 08/14/2011 - 19:20 | 1560007 machineh
machineh's picture

The Euro-Bong is charged with salvia divinorum.

You get high for 30 seconds on each fantastical pronouncement.

Then you come down and have a headache. And bond yields are higher than they were before.

Sun, 08/14/2011 - 19:38 | 1560041 fraud-fed
fraud-fed's picture

I tried the Euro-Bong and woke up to find Merkel next to me in bed squeezing my nutsack.

Sun, 08/14/2011 - 20:07 | 1560111 chump666
chump666's picture

hahahahahahahaha...oh f*ck that was funny.

Sun, 08/14/2011 - 20:17 | 1560135 DeadFred
DeadFred's picture

Next time avoid the mushrooms withs the bright yellow spots...

Sun, 08/14/2011 - 19:15 | 1559955 Reptil
Reptil's picture

If they ram that through (like they did about everything this summer) they'll have a hell of a problem.
Typical EU arrogance says they'll try. Knowing our politicians they'll try to sell it, because they're seeing this "no" as a negative on their carreer.

Dutch lost nearly 40% of buying power when the euro was introduced, subsequently the country invested every year in the euro, and now the eurocrats wanted to dictate how to split up ING Bank? That was an eyeopener for some people I guess. Being a trading country the Netherlands profit from fopen borders but this does not mean it reflects positively on citizens themselves in a depression.

Generally dutch don't really care whatever happens (Lisbon Treaty?), until they feel a hand on their wallet. I bet those numbers will go up to 70% once they come back from holliday and figure it out (that 59 billion was just the start). :-S

Time to let the ponzi stop, and let the bankrupt be bankrupt, I'd say. As you can see I'm not calling in the desert. I think the people here have had enough of the whole circus. It'll be pain for a while, but it'll be the only option, save for an even bigger ponzi in the form of a global currency.

Sun, 08/14/2011 - 18:58 | 1559956 pesamystik
pesamystik's picture

Eurobonds will happen. After all, Soros demanded them in an Op-Ed in Reuters. We all know that the ponzi demands it, and the German government will pretend they will not do it, and then, just like that, they will do it.  The DOW will then soar to 30,000.

Sun, 08/14/2011 - 19:01 | 1559965 Reptil
Reptil's picture

Ask anyone here who George Soros is. lol

Sun, 08/14/2011 - 19:08 | 1559986 carbonmutant
carbonmutant's picture

Soros also suggested that Greece, Portugal quit EU

Sun, 08/14/2011 - 22:48 | 1560435 kito
kito's picture

@pesa-absolutely right it will happen. all germany is waiting for is total capitulation by the debt laden european countries to agree to fiscal integration. and it will happen because there is no other way for these junkie nations to get their fix. they will sell their souls and germany will get what it has waited for... a REAL opportunity to enforce fiscal responsibility in these spendthrift nations. oh, and the people--HA!! that pathetic "revolution" in greece really deterred the austerity vote so they could get their next fix. and those true finns? yeah, the people sure prevailed there as well. same for spain, portugal, italy, etc. the european govts are hell bent on maintaining the union, and regardless of the spineless european populace, eurobonds ARE coming.

Mon, 08/15/2011 - 04:04 | 1560799 newworldorder
newworldorder's picture

You are correct. What the bankstas want the bankstas get. German and French democracy be damned.

Sun, 08/14/2011 - 18:58 | 1559957 JW n FL
Sun, 08/14/2011 - 19:02 | 1559969 JW n FL
JW n FL's picture

here is a thought!

how much money does the FED collect?

while crying broke? while demanding the debt ceiling be raised!

how much in income does the FED see monthly?

anyone want to take a guess?

why does it no drop down as income? becuase it is participated out before the 30 day mark! it never hits the books.. call it a siv or private ___________ whatever it does not matter.. the FED has a fuckign FANTASTIC Cash Flow Position that NO ONE is talking about! LOL why not?

Sun, 08/14/2011 - 20:07 | 1560110 steve from virginia
steve from virginia's picture


JW, I think the Fed might be up to some kind of funny business as well.

Bernanke can use swap lines and primary dealers as toxic waste dumps and the ECB as a straw purchaser. A private understanding between central bankers would prop up the EU key man ... for a little while longer.

Eurobonds are a good idea and not issuing them is a missed marketing opportunity for the EU. There are willing lenders, not enough quality debt to sell!

The hold up is the need for a Europe- wide taxing authority to guarantee service on euro denominated bonds. As EU taxes are very high already, adding a continental tax would mean reduction in individual sovereign tax collections.

Of course, a Eurobond would gain a large float-footprint and borrowing sums would soon cost less than raising them by means of taxation. EU rates would decline the same way and for the same reason US and Japanese rates have declined.

The EU could easily raise another 4-10 trillion euros and buy itself some time without increasing the overall tax burden.



Sun, 08/14/2011 - 22:13 | 1560340 JW n FL
JW n FL's picture

you have two different buyers of debt for Europe as a whole or parceled out.. either or.

1. The Powers the Be would buy the debt if they knew things were going to get better. they are not, we have not seen bad yet.

2. The FED would agree to fully fund whatever purchase thru any number of other Agencies, thusly being the end buyer.


thats it. there is no buyer at any price for the shit they are selling.

Sun, 08/14/2011 - 23:14 | 1560493 tip e. canoe
tip e. canoe's picture

what you guys are describing sounds very similar to the Lehman Repo 105 scam, but on a super-sovereign level.  

Benzlebub1 : "And i would have gotten away with it if it wasn't for those darn Southern goyboys..."


1 still chuckling at that name slewie.

Sun, 08/14/2011 - 19:01 | 1559964 WestVillageIdiot
WestVillageIdiot's picture

It is funny how the pronouncements are coming closer and closer together.  The funds needed to save it all get bigger and bigger.  And the deniers still act as if there is nothing wrong and they can keep this going forever.  Everything feels like 2008 again.  Everything.   

Sun, 08/14/2011 - 19:03 | 1559971 ISEEIT
ISEEIT's picture

Honestly? I just moved my S/L to 1.44 and have enough in reserve to cover to 1.50. I've never made a dime off of EUR/USD action up off of 1.40. I understand that I could have. Knew that I could have. Crappy speculator I am though. I just won't bet on a dead horse.

Sun, 08/14/2011 - 19:07 | 1559977 chump666
chump666's picture

The EZ leaders have lost the plot - completely.  They are simply losing control.  Let the market clean out the garbage, the longer these brainacs delay the inevitable, the bigger the pain.  The shortselling ban proposed throughout the G7 is desperation gone mad, market is going to read into that  - EZ is a FUBAR trade.

Sun, 08/14/2011 - 19:11 | 1559991 WestVillageIdiot
WestVillageIdiot's picture

It just feels like we are going to have that day where things snap.  We will wake up and the DAX will be down 400.  What then? 

Sun, 08/14/2011 - 19:45 | 1560057 Lazlo Toth
Lazlo Toth's picture

The next twig will snap.

Sun, 08/14/2011 - 19:06 | 1559980 WorkOutWellForAll
WorkOutWellForAll's picture

The one and only solution to these problems is around the revelation that accurate reports of perception and understanding (honesty), facing the highest level problems, will always yield work out well all around solutions.

The only problem is the festering of cliched deceit, manufactured en masse for the past century, and then refined with science.

Unless overt acknowledgement of massive pain and deprivation of those below -- domestically and abroad -- forms the basis of a global figuring out what do to -- then, we are just supporting the current orders with all our minds and hearts.

Unfortunately, the same goes for almost all criticism here -- which lacks any responsibility and urgency to ensure it will work out -- a responsibility that is directly proportionate to your fed belly and your brain at your fingertips.

Regarding the Europeans -- there appears a 60 year old chasm of deference to the power inertia of US corporate military capitalism. Unless the lights of Germany and France think underneath this half-century of accumulated privileges in malfeascent political economy, their thinking is just propaganda, along with all the mere reporters or their thinkings.

You'd have to hold sincerity and principled truth-creation over personal security -- which is foreign to the world today, although wasn't to Eliot's entirely so. Massive world extinguishing wars wipe out the courageous and righteous first and foremost. The unprincipled survivors then lord over the ruins.

Sun, 08/14/2011 - 19:07 | 1559981 Missiondweller
Missiondweller's picture

Germans are running out of time to save their sovereignty. If they don't take to the streets soon they are doomed.


And Soros? Hell, you know he is short the Euro even as he cheers for Germany's subjigation to the EU. There's nothing he loves more than to profit from a currency's collapse.

Sun, 08/14/2011 - 19:17 | 1560001 WestVillageIdiot
WestVillageIdiot's picture

Prussia will rise again.  Decentralize all of these monster governments. 

The world's standard of living is going to get much lower.  At least the U.S. standard of living willl be heading down.  That is why all of this is being done.  Nobody wants to jump into that next phase.  They all want to see how it works for somebody else first. 

Sun, 08/14/2011 - 19:57 | 1560092 Missiondweller
Missiondweller's picture

Prussia will rise again.


LOL! My mother's side of the family was from Prussia before the came over (to the US).


Sun, 08/14/2011 - 19:35 | 1560035 Long-John-Silver
Long-John-Silver's picture

One day soon They will run Soros through a Guillotine just to make sure it will properly work for all his elite friends and business partners in line behind him.

Sun, 08/14/2011 - 19:11 | 1559990 Everybodys All ...
Everybodys All American's picture

Write the debt off and start over with a tier one Eurozone and a tier two Eurozone. Two currencies. A good bank vs. bad bank. France and Germany in tier one or the current currency. The rest in tier two and a new currency. Create rules to which it would take to regain tier one.

Get it over with, reset the banks, stop trying to destroy everything with sovereign debt rescues.

Sun, 08/14/2011 - 19:36 | 1559999 disabledvet
disabledvet's picture


Sun, 08/14/2011 - 19:17 | 1560000 carbonmutant
carbonmutant's picture

The six largest U.S. money market funds have eliminated their lending to Italian and Spanish banks, reduced investments in French banks and are favoring Swiss securities for their $511 billion of assets.

Sun, 08/14/2011 - 19:18 | 1560003 oogs66
oogs66's picture

No way these would get a aaa rating!

Sun, 08/14/2011 - 19:21 | 1560008 WestVillageIdiot
WestVillageIdiot's picture

Gold is hovering around $1,740.  It is funny how the margin hike seems to have broken its momentum.  Could the buyers really have second thoughts about gold?  With all of the potential currency problems you would think the drop in price would make them buy more. 

Bring gold back to $800.  Oh, please, do it.  Europe is fine.  Japan is fine.  USA is fine.  There is no need to own gold. 

Sun, 08/14/2011 - 19:30 | 1560027 disabledvet
disabledvet's picture

When economies start imploding the bugaboo of soaring yields foces gold to compete with cash. "Paper covers rock" as they say.

Sun, 08/14/2011 - 23:03 | 1560459 tip e. canoe
tip e. canoe's picture

yes, but silver scissors cut paper.

Sun, 08/14/2011 - 19:23 | 1560015 AR15AU
AR15AU's picture

So, eurobonds now immenent... got it...

Sun, 08/14/2011 - 22:09 | 1560329 JW n FL
JW n FL's picture



You are Paying attention!

Sun, 08/14/2011 - 19:23 | 1560016 machineh
machineh's picture

To summarize Europe's fatal error: you cannot fix insolvency with 'more liquidity.'

All else is commentary.

Mon, 08/15/2011 - 05:27 | 1560840 falak pema
falak pema's picture

Pot calling the kettle  black ! What do you think BB has been doing since Tarp/Qe days?

He does have a decisive advantage over ECB : exorbitant privilege of reserve currency! He can print away as its US money but the World's problem. The ECB can't whence the current eurobond problem. 

Won't save the USD but helps in the race down to foggy bottom as Oligarchs rip-off the riches of EU sovereigns.


Sun, 08/14/2011 - 19:48 | 1560063 slewie the pi-rat
slewie the pi-rat's picture

fuking soros is always a trip, isn't he?  pretnding he doesn't know abt the benzulbub's new "Bailout All Now" button  while fading his own bullshit abt "mutualizing debt"

Sun, 08/14/2011 - 20:04 | 1560106 RiverRoad
RiverRoad's picture

Kudos to the European people for repudiating bankster sophistry:  The Emperor HAS NO clothes!

Sun, 08/14/2011 - 20:04 | 1560108 max2205
max2205's picture

Die, erurobong..... Lol

Sun, 08/14/2011 - 20:19 | 1560140 Terminus C
Terminus C's picture

Gold and silver getting beat up atm.

Sun, 08/14/2011 - 21:28 | 1560262 caerus
caerus's picture


Sun, 08/14/2011 - 21:33 | 1560273 PulauHantu29
PulauHantu29's picture

Sarkozy is too busy invading other countries so he can grab th enext Nobel Peace Prize for him to be involved much in the Boondoggleization of the EU. The Germans ar ein control and IF they are as smart as they have historically been they will join with other hard working German-speaking peoples of Austria and Exito the EU.

Sun, 08/14/2011 - 22:53 | 1560443 gookempucky
gookempucky's picture

Merry go round the Bonds..... everything on this planet has a bond attached to it period. This has shackled the people of this for name it.

Asset backed coupon etc etc etc and now many chains around our necks and so many dont even know why they are drowning... but hey the food in Iowa was awsome.

Sun, 08/14/2011 - 23:01 | 1560455 tip e. canoe
tip e. canoe's picture

go long corndogs

Mon, 08/15/2011 - 09:01 | 1561146 gookempucky
gookempucky's picture

Tip nice catch on that lehman comparison.  Always wondered why they put them on a stick....never mind.

Mon, 08/15/2011 - 00:30 | 1560643 Dirt Rat
Dirt Rat's picture

They're not passing around a bong. They're hitting off a crack pipe. What flavor crack would you prefer-- the cherry-bleach splash or the lemon-infused Drano?

Mon, 08/15/2011 - 05:59 | 1560856 Wolf in the Wilds
Wolf in the Wilds's picture

Listening to bankers like Buiter and King is not only stupid, its suicidal.  Germany is very familiar with the effects of debt monetisation and I am certain they will have zero interest to go through that again.  There is a solution for Europe, but it requires acceptance and political will to do what must be done:

Will it happen?  Not bloody likely.

Mon, 08/15/2011 - 06:58 | 1560892 Overflow-admin
Overflow-admin's picture

- System isn't enough powerful...
- Then decrease the CAS latency, drop it down to 6.
- OK but it may become unstable, we are playing too close to the minimum cylce limit. You might want to increase voltage say 1-2 percent
- What are the chances the general public becomes aware that the system became unstable because of our new CAS settings?
- Look, do you think the stupid public understand that we had to increase power input to keep it running? No! So don't ask about the CAS.

Nerds will all understand my point.

Do NOT follow this link or you will be banned from the site!