With Europe Broken Again, Sarkozy And Lagarde Are Back To Begging

Tyler Durden's picture

What a difference a month makes. About 4 weeks ago the European crisis was "over" - French President Sarkozy exclaimed that: “Today, the problem is solved!” Christine Lagarde, former French finance minister, and current IMF head following the framing of DSK, added that “Economic spring is in the air!”... Fast forward to today when following the inevitable end of the transitory favorable effects of the LTRO (remember: flow not stock, a/k/a the shark can not stop moving forward), the collapse of the Spanish stock market, the now daily halting of Italian financial stocks, the inevitable announcement that shorting of financials in Europe is again forbidden, and finally the record spike in Spanish CDS, Europe is broken all over again. Which brings us again the Sarkozy and Lagarde. The Frenchman who is about to lose the presidential race to socialist competitor Hollande (an event which will have major ramifications for Europe as UBS' George Magnus patiently explained two months ago), no longer sees anything as solved, and instead is openly begging for the ECB to inject more, more, more money into the system to pretend that "problems are solved" for a few more months. Incidentally, so is Lagarde, for whom in an odd change of seasons, economic spring is about to be followed by a depressionary winter. The problem is both will end up empty handed, as the well may just have run dry.

From the FT:

In effect ripping up a deal to shelve public differences over the ECB reached in November at the height of the eurozone crisis with Ms Merkel and Mario Monti, the Italian prime minister, Mr Sarkozy said the matter of ECB support for growth was “a question we cannot avoid”


He said: “If the central bank does not support growth, there will not be enough growth . . . I know the difficulties that surround this subject but we have the duty to reflect on it because it is a major problem for the future of Europe.”


Mr Sarkozy said: “Europe must purge its debts, it has no choice. But between deflation and growth, it has no more choice. If Europe chooses deflation it will die. We, the French, will open the debate on the role of the central bank in the support of growth.”

In other news, remember that so very "friendly" relationship between Merkel and Sarkozy? Kiss that goodbye.

And while Germany may or may not have had enough of bailing out everyone (between the ECB funding all peripheral banks, and TARGET2 funding all peripheral current account deficits), the IMF just can't get enough. Unfortunately, unlike the ECB, it does not have its own printer. Enter panhandling. Literally:

Holding up her Louis Vuitton handbag, the new managing director of the International Monetary Fund (IMF) turned to her fellow power brokers in one session and said: “I am here, with my little bag, to collect a bit of money.”



The joke broke the ice and the room rippled with laughter. But, beneath the disarming charm, Lagarde was deadly serious. For months now, the IMF has been trying to coerce its 187 members into committing as much as $600bn (£378bn) more to the fund to build what she described at the Brookings Institute in Washington last week as a “global firewall” to defeat once and for all the European sovereign debt crisis.

The problem, as is glaringly obvious, is that the IMF's piggybank really is the US. And no US, no "big bazooka", no "giant firewall"

Ever since “the Greek problem” flared up again in July last year, the talk from Brussels to London to Beijing has been about “big bazookas” and “giant firewalls” – a vast bail-out fund available to rescue any struggling nation from bankruptcy.




It has been a baptism of fire for Lagarde, France’s former finance minister who was appointed after the disgraced Dominique Strauss-Kahn stepped down in the wake of rape allegations. Just nine months into the job, she has the unenviable task of trying to build a co-ordinated global strategy on the shifting tectonic plates of domestic politics.


At the IMF’s key spring meetings in Washington this week, she faces her first real test. If Lagarde can strike a big deal on resources, she will be garlanded with praise. If she can’t, the jury will remain out. Either way, the pressure is now on.

Sorry, but with a US debt ceiling fiasco due in 4 months just ahead of a critical presidential election, the fire is about to be turned up a notch. Or ten... and be sulfur based. Because the math no longer works... And it never did.

Tellingly, all the US Treasury could muster in response to the eurozone agreement was the weak recognition that it “reinforces a trajectory of positive efforts to strengthen confidence in the euro area”. UK sources said that, privately, the US was bitterly disappointed, and adamant that no further US taxpayer money would be put at risk of more euro bail-outs.


Normally, US opposition would be enough to kill any plan to increase resources. But Lagarde has other ideas. She hopes to corral the rest of the major non-eurozone players – the UK, Canada, Japan, Australia, China and India – into a joint agreement. But she has already begun managing down expectations.


Having previously indicated that she wanted as much as $600bn more, she said at Brookings: “The needs now may not be quite as large as we had estimated earlier this year.”


UK sources said she would be lucky to secure $400bn. Of that, the eurozone members have committed to contributing €150bn – on top of their own bazooka – leaving just $250bn to be gathered from other members.


Even at $400bn, the extra resources would be a retreat from earlier ambitions. Lagarde wanted to increase the IMF’s available resources from the current $400bn to $1 trillion, while global policymakers had hoped for a total bazooka of €2 trillion to allay concerns about Europe. The IMF and the eurozone’s combined funds will fall well short of that.

Forget bazooka: IMF will be lucky to get a peashooter. In the meantime, Spain will not wait:

As markets have lost faith in Spain, questions have resurfaced about whether the eurozone firewall is big enough. According to CEPS, “even if the [firewall] only had to cover half of the financial needs of Spain and Italy”, it would need another €400bn.


Even securing €250bn from non-eurozone members excluding the US could prove difficult.

So now that Europe is broken all over again, and with elections, riots, strikes, tumbling markets, hundreds of sovereign bond auctions, and no promise of free liquidity from anyone despite daily rumor otherwise... what happens next?

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Squishi's picture

here is the money Now go home and get your fucking shoebox!

blindfaith's picture



AKA...the horse got out.  Broke his leg in the field on an unseen rock in the green shoots.  Now we have to drag it's terminal ass back to the barn that burnt down yesterday.


Got it.

Ahmeexnal's picture

To Mr. Lagarde: It's nice to see no rope shall be spent when you are finally lynched by the angry mob: they will use your Hermes scarf to hang you from a lamp post.

To Ms. Sarkozy: You should start filling up the learjet with goldbars now before you are trapped in the Bastille and your head is severed from your torso.

bank guy in Brussels's picture

In the above article, Tyler says that Lagarde's IMF « does not have its own printer. »

However, in a famous article from October 2008, Ambrose Evans-Pritchard in the UK Telegraph, pointed out that the IMF actually does have the 'nuclear option' of printing money, and it has actually already been used briefly:

« The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis. »


TBT or not TBT's picture

"Mr" LaGarde?    Do you know something about what's in her pants that we don't?    Do tell!

Akrunner907's picture

Time for Plan B: nationalize all private pension accounts and transfer the funds to the central treasuries.

Element's picture

If she can fill her hand bag Germany may remain compliant and suckered for a few more months.

Manthong's picture

Geez... she was born in 1956...

A little too much time at the beach, it seems.

DanDaley's picture

"Time for Plan B: nationalize all private pension accounts and transfer the funds to the central treasuries."

Works for me.

Con mucho amor,

Cristina Fernández de Kirchner

Manthong's picture

That graphic could be a little more trenchant with a guillotine in the background.

Scalaris's picture

Not even a Birkin?


Element's picture

And look at that, she bought her wittle poodles ... I hear French crones like a good ... poodle.

LongSoupLine's picture

Again proving that the term "incompetent crooked assholes" has no geographic nor cultural boundaries.

HellFish's picture

SHINE box, not Shoe box.

tom a taxpayer's picture

Lagarde stole the line from the Cartagena lady who said: “I am here, with my little bag, to collect a bit of money."

stocktivity's picture

As if the US won't relent and pony up the money....It's all Bullshit!

navy62802's picture

There's no problem here. Move along.

blindfaith's picture



NICE...Damn...TAN.  No that is not Chinese, it is observation on the 'lady".

Well, ok, maybe it is Chinese.

OpenThePodBayDoorHAL's picture

I wonder what she looks like *down there*...I bet all leathery and fake tan too. I'm thinking a little spiky racing stripe, maybe dyed blonde...Sorry, lunchtime

TBT or not TBT's picture

More speculation on what is in her pants.   Hmmm.    ZH breaks the impotant stories after all, so...

Western's picture

I bet she is a good lay.

hairball48's picture

She might be. She's certainly UGLY enuf to be a good lay

theMAXILOPEZpsycho's picture

I honestly think if I were ever faced with the choice with a gun to the back of my head, I'd go for Merkel over her

tom a taxpayer's picture

Mozillo shared his tanning secrets with Lagarde.

Agent P's picture

No kidding...at first I thought the picture was of a matching set of luggage.

slaughterer's picture

Uh, time for LTRO3?  Al-fuckin-ready???

urbanelf's picture

Mais, non!  L'Opération de Torsion!

sunny's picture

The most recent Trillion (Feb 29) lasted 46 days before reality hit home again.  Any idea on how long the next Trillion will matter?  As much as 30 days?  Less?  Should we start a pool?


cranky-old-geezer's picture



It just boggles my mind how these otherwise intelligent people can be so brainwashed, thinking more money to fund more debt will solve a debt problem.  It's pure insanity from otherwise intelligent people.

Three years ago they said print a little money and fund a little more debt till the economy recovers, then it'll be paid back.

Of course the economy didn't recover, and they've been coming back every few months with the same story, print a little more money and fund a little more debt till the economy recovers.

Of course I never believed their story.  It isn't borrowing a little more money till the economy recovers.  It's looting the nation a few hundred billion at a time.

We can't blame bank bailouts solely. Governments are the big bailouts now.  And it's a bottomless pit.  No end in sight.  More and more borrowing funded by more and more printing until currencies collapse.

These people aren't stupid.  They have to know what all this printing is doing to their currencies.  They have to know currency collapse is coming.

But they keep right on, which tells me it's part of some larger plan, a plan I have no knowledge of, but it has to be there nonetheless.

Why would these people want to destroy their currency?  I don't understand.   Unless looting is the reason.  Looting the nation.   Looting the people.   Looting everybody using that currency.

Central bankers are the 21st century pirates, looting entire nations with their printing press, passing that looted wealth off to government stooges, then most of it ends up in banker pockets ultimately.

Maybe governments are just money launderers for central banker pirates.

Mad Mad Woman's picture

They will loot every single country and then leave everyone high and dry. Then there will be massive unrest. The bankers think they will have the best security money can buy, but in that kind of situation, the bankers are dead ducks. It will be a world wide French Revolution, and will get very messy for those blood suckers. In that case they all deserve to die for what they have done to the world. Even Madame LaGarde is not safe.

The Alarmist's picture

Plus ça change! Sorry, I meant to say, "Spare some change?"

blindfaith's picture



You are not going to believe this.

In my town, they are fencing off an area that if you want to beg/ask/plead (for the childern) for money, food,OR  a fucking break...you HAVE TO BE INSIDE that fence.  GOD help you if you are not because..... you already know the end.

Luckly, it is near HLS and a nice Coach Store which go hand in hand.

TooBearish's picture

LTRO 3 ...Bitchez!

Caviar Emptor's picture

It's an international Conga Line of deflating economies circling the drain, "solved" by knee-jerk money printing which in turn leads to biflation: the two-headed monster that is now real but only existed in central banker nightmares. 

blindfaith's picture



Yes, and it can last for a VERY VERY VERY long time before the air is gone out of the balloon...longer than your shorts can endure I assure you.


Think LTCM, and the other shadow sewers.  The Roman Empire falls...the world, however didn't wait, but instead, observed what followed on.........  And, here we are.

Caviar Emptor's picture

LTCM was just a feeding line leading to the main sewer, the Cloaca Maxima of the international finance combine (banks conspiring together and with governments to blow bubble after bubbe, allow mass speculation with vital resources all based on the promise of being unquestioningly backed up by taxpayers)

Mad Mad Woman's picture

There is no way that this can continue for a very long time. No way. They are at the end of the rope and there is no knot at the end.

cranky-old-geezer's picture



knee-jerk money printing which in turn leads to biflation: the two-headed monster that is now real but only existed in central banker nightmares.

No, it's just a crazy illusion in your mind, nobody else with the smallest knowledge of economics and monetary theory believes your "biflation" bullshit.

What you're describing is two effects of inflation (and hyperinflation eventually).  The purchasing power of your savings and paycheck drops while prices rise.

It's because you can't raise your price like other people can raise their prices.   Your employer determines your price, not you, and they're gonna keep your price low as they can, and if you don't like it there's lot's of people ready to step into your job, and you know it, so shut the fuck up.

You wana raise your price like other people raise their prices?  Go start your own business ...if you have the balls for it ...which you probably don't ...pussy.

"biflation".  What horseshit.

DanDaley's picture


Somehow I miss the warmth of your other avatar.

cranky-old-geezer's picture



Actually I changed it back to the pink cameltoe.  Don't know why Dark Side Of The Moon album cover still showing sometimes.

Deep79's picture

I wonder these days, all these so called 'leaders" are really stupid. It amazes me the shit they say. Is it because the ponzi has hit a wall, or where these so called leaders always this stupid.

Caviar Emptor's picture

Sorry, they ain't stupid. That's what they'd like you to believe so you don't come after their heads