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Europe Doesn't Get It

Tyler Durden's picture


From Peter Tchir of TF Market Advisors

Europe Doesn't Get It

I still think the most likely scenario is that some agreement to agree is made at the summit, which is then followed up by increased printing from the ECB, coupled with new Fed policies and fresh IMF money.  Although that still seems the most likely, I am getting concerned that Europe is once again missing the point. 

Many EU leaders seem to actually believe that the Treaty changes are important.  The reality is the market could care less about treaty changes.  The market cares about only one thing, that the ECB will announce new, bigger, more aggressive sovereign purchases.  That’s all the market cares about.  The market believes that the treaty changes provide an excuse for the ECB and IMF to ramp up their efforts.  The EU can do all the treaty changes it wants, but if it is not followed up with aggressive new printing policies, the markets will sell-off.

Not only are politicians acting as though the treaty changes mean much, there is even talk about being able to implement changes without national votes.  That idea horrifies me on a personal level as it is yet again trashing any sense of democracy, but it is bad for the markets.  I have been assuming that the meeting will result in another agreement to agree. That is relatively easy to pull together.  Since it doesn’t really mean much, any countries that aren’t really on board, can be cajoled into holding hands for the photo op and pretending they agree long enough for the ECB and IMF to throw more money at the problem.  Agreement is far less likely if real permanent changes are being implemented.  It is one thing to agree to the plan on the condition that you have to go back and get approval.  It is much more risky for someone to agree to permanent changes implemented using some backdoor legal technique.  Talk of actually implementing policy action this week is actually a negative as it makes it less likely that they can announce a “successful” summit.  On a side note, my favorite part of the proposal is the fines for going over the approved limits.  So countries that have the biggest deficits will be fined, adding to those deficits?  Debtor’s prison never worked very well, so why this would accomplish much is beyond me and would likely be waived any time it could be used.  But no one on wall street has bothered to read the treaty proposals because no one cares, all anyone cares about is that the ECB uses it as an excuse to print.

Yesterday’s FT rumor of ESM and EFSF working together was yet another reason to be afraid that Europe doesn’t get it.  Not only would implementing both at the same time place the AAA rated countries at greater risk of downgrade, it ignores the fact that EFSF has been a total failure.  I thought Europe had moved beyond floating yet another iteration of something that hasn’t worked.  The fact that they haven’t is a potential indication that the printing presses aren’t going to be turned on as soon as the market would like.

Finally, there is more and more talk about what the national central banks can do.  People are acting as though they were cleaning the living room, and found some money when they lifted up the cushions on the couch.  This is not “found” money.  Participants and lenders are well aware of these reserves.  They can be used for example to fund loans to the IMF to lend back to some countries, though I don’t fully understand why they can’t just lend to the countries directly, but I assume there is some law that lending to the IMF lets them circumvent.  But there will be a cost to these actions.  There will be a consequence, and although it will later be viewed as “unintended” the consequences are actually foreseeable.  The countries with large reserves at the national central bank level have a reduced cost of funds because of those reserves.  Lenders are not always totally stupid.  There is value that is being realized from having those reserves.  Using them to create loans for the IMF will impact that country’s ability to borrow.  Plain and simple.  The fact that many pundits are treating this as newfound money that can be used any which way, without consequences is absurd and is yet another example of why so many ideas have failed.  Any plan that raids the national central banks for money for the PIIGS needs to be thought through more carefully and the potential costs need to be addressed.  The cost/benefit analysis may be worth the risk, but I suspect serious analysis would show that it is a bad idea.  The cost/benefit should be about zero since it is just shifting money from one place to another.  There really is no obvious reason to believe that this is a net positive.  In the real world it is likely negative because as we have seen time and again, these changes break the existing model and that causes confusion which more than offsets any potential benefit (not triggering CDS is a shining example).

So while we limp along towards the most likely outcome, the risk of disappointment or even outright failure continues to grow.  The inability to hold yesterday’s rumor rally is a signal that the market has moved well past the short squeeze phase and is now trading long. 


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Wed, 12/07/2011 - 09:41 | 1954403 ghengis86
ghengis86's picture

I Couldn't care less about European Banksters. - dot in he'll you pieces of shit

Wed, 12/07/2011 - 09:41 | 1954405 achmachat
achmachat's picture

you got autocorrect on?

Wed, 12/07/2011 - 09:45 | 1954411 Chris Jusset
Chris Jusset's picture

"Europe Doesn't Get It"


Europe is trying to fool the market ... but that never works for more than a few days.  I can't wait for the Eurozone to advance from the nursery school stage to kindergarten ... because this is really getting tiresome.

Wed, 12/07/2011 - 10:53 | 1954697 Ropingdown
Ropingdown's picture

Europe is trying to fool Germany, really.  The market wants Germany fooled, and quick. "Put your credit in there, baby. C'mon."  Uh, no. Germany wants major treaty visibility and rights,  or no more advances. Simple. Belgium, Lux, Italy et al keep trying...cause their banks are about to bust.

Wed, 12/07/2011 - 09:46 | 1954421 ghengis86
ghengis86's picture

Yep. Set to DVDA

Wed, 12/07/2011 - 09:45 | 1954416 ghengis86
ghengis86's picture

First comment and auto correct Bernanke's me; I can tell this day is going to be great

Wed, 12/07/2011 - 09:41 | 1954404 Irish66
Irish66's picture

Its been over 2 years, why in the hell would you think they would get it now

Wed, 12/07/2011 - 09:50 | 1954431 gojam
gojam's picture

Personally, I think they do get it.

But how do European countries reconcile their people to the revolutionary and radical policies that will be needed to come out the other side ?

Only by exhaustively attempting to find a solution while increasingly harsh austerity measures are presented to the public.

Only then will the public accept the inevitable.

Wed, 12/07/2011 - 09:51 | 1954440 Irish66
Irish66's picture

2 page piece of this or the world will end

Wed, 12/07/2011 - 09:57 | 1954465 gojam
gojam's picture

The recent Irish budget looked bloody awful. Not quite the 'end of the world' but I bet the Irish public are starting to wonder whether default might not be better in the end.

Wed, 12/07/2011 - 11:46 | 1954873 oogs66
oogs66's picture

But it wouldnt end. Bankers would just be poorer. Instead they making more money again with swap lines

Wed, 12/07/2011 - 09:42 | 1954406 LawsofPhysics
LawsofPhysics's picture

The world doesn't get it, Europe is just being forced to be the first to deal with it.  Hedge accordingly.

Wed, 12/07/2011 - 09:42 | 1954408 PontifexMaximus
PontifexMaximus's picture

watch latest BB news re secs offered and stretching lines to 2 y

Wed, 12/07/2011 - 09:42 | 1954409 midgetrannyporn
midgetrannyporn's picture

"The market" that's hilarious. There is no market, there is only the squid.

Wed, 12/07/2011 - 09:45 | 1954412 TruthInSunshine
TruthInSunshine's picture

National Public Radio's 'Marketplace' (yes, I listened; no, I don't why; yes, I regret it now, as always), which ebbs ever so more closely to cnBSc with each passing day (as their sponsors are all retail brokerage firms now, running ads, to compensate for the black hole of 'giving' that the increasingly poor Amerikan Public isn't making), had a segment on this morning whereby they declared that the fate of the euro now rests squarely in the hands of the UK, which a) never technically went along with the common currency of the Eurozone, and b) has one of the highest debt levels of any nation on earth, let alone in the EU.

I find all of this absolutely fascinating.

The propaganda, that is...


What are the intrade odds on unmitigated, "open ze floodgates, Herr Trichet, and print ze fiat!," anyways?

Wed, 12/07/2011 - 09:47 | 1954423 GMadScientist
GMadScientist's picture

Anyone waiting to be saved by England is well and truly "rogered".

Wed, 12/07/2011 - 09:48 | 1954429 TruthInSunshine
TruthInSunshine's picture

I do believe we'll soon discover whether any fight, aspirations of freedom and sovereignty, and vestiges of rationality have been completely snuffed out of Germans and Brits, complete with spinal cord detachment.

Wed, 12/07/2011 - 12:20 | 1955010 Jonathan E
Jonathan E's picture

Just learn some Geography...

Wed, 12/07/2011 - 09:49 | 1954427 digitlman
digitlman's picture

Kai Ryssdal is just as much the market pumper as Cramer.  Just not as loud.

Wed, 12/07/2011 - 09:54 | 1954453 GeneMarchbanks
GeneMarchbanks's picture

Yes there is propaganda. Then, there is also the need to create a narrative for events that i) you never saw coming in the first place and ii) a general calming effect to the frightened masses.

'What are the intrade odds on unmitigated, "open ze floodgates, Herr Trichet, and print ze fiat!," anyways?'

Wrong question. You should be asking what the general psychology of the German population is re: the past generations and their mistakes.

Bass polled the Germans. No go on the 'printing'. I'm seeing no changes so far from that thesis.

Wed, 12/07/2011 - 09:44 | 1954414 Construct
Construct's picture

to hell with europe I am on my way out ASAP.

Wed, 12/07/2011 - 09:44 | 1954415 Fuh Querada
Fuh Querada's picture

Why could the market not care less about treaty changes? Because they know damn well that the existing fucking treaties (Maastricht: no bailout, no debt union, deficits under 3% and all the other shit) have been broken and trampled upon since their inception, so why the hell is there any reason to suppose that new treaties will be worth more then the paper they are written on?

Wed, 12/07/2011 - 09:53 | 1954451 Mike2756
Mike2756's picture

Treaties were always made to be broken, some of the EU countries broke it before it was ratified.

Wed, 12/07/2011 - 09:45 | 1954418 youngman
youngman's picture

It is sad that  is all the markets care about....whether a central bank is going to print fake FRN....sad...

Wed, 12/07/2011 - 09:52 | 1954439 GOSPLAN HERO
GOSPLAN HERO's picture

fake dollars

Wed, 12/07/2011 - 11:49 | 1954885 oogs66
oogs66's picture

Yet the people pretend banks are capitalists and deserve huge bonuses

Wed, 12/07/2011 - 09:46 | 1954422 Coldfire
Coldfire's picture


Wed, 12/07/2011 - 09:52 | 1954445 Schmuck Raker
Schmuck Raker's picture

Cue the Kenny Loggins soundtrack.

Wed, 12/07/2011 - 09:48 | 1954424 Nascent_Variable
Nascent_Variable's picture

If a treaty changes in a forest, but the countries affected by it don't get to vote on it, does the death of democracy make a sound?

Wed, 12/07/2011 - 09:50 | 1954428 tim73
tim73's picture

Market also says go jump into burning lake. Market ueber alles! No wonder USA is fubar, they believe everything The Everpresent "Market" tells them.

Wed, 12/07/2011 - 09:49 | 1954432 Schmuck Raker
Schmuck Raker's picture

"I have been assuming that the meeting will result in another agreement to agree. That is relatively easy to pull together."

Not for these yawhoos...

Wed, 12/07/2011 - 09:50 | 1954434 vegas
vegas's picture

They are all political hacks. Don't ever expect them to get it. That's why they're hacks. Nobody in the private sector would ever hire these fucktards for anything.

Wed, 12/07/2011 - 09:51 | 1954441 i be julia
i be julia's picture

Europe gets it.

America gets it.

China gets it.

The global financial system is out of cash.

And the power-that-be want to keep the Ponzi going.

But the debt's too big.  So we're headed for a deflationary collapse...then war.

Case closed.

Wed, 12/07/2011 - 09:53 | 1954446 bbq on whitehou...
bbq on whitehouse lawn's picture

This is how the Euro dies. Cheap money ( US dollars ) drive out expensive money ( Euros ).

Banks need money and lots of it. Since the ECB will not print the banks will find other money for funding.

The US dollar is taking the place of Euros.  By not printing the Euro dies the same as printing Euros.

Germany will have to leave the Euro zone or lose more the just the Euro.

Wed, 12/07/2011 - 09:53 | 1954450 PoorMan429
PoorMan429's picture

I love reading you guys.

1. Why would the Swap line between ECB and FED (whose purpose seems to be creating dollar denominated liquidity to EU banks) Do anything to help this issue. All we are doing is swapping Euro liquidity, for dollar liquidity. Sincve the Euro Banks are leveraged much higher (presumably in Euro Denominated Risk) HOw does this make a damn difference.

2. Since there is no net change in money supply, devaluation of hard assets should not occur. On the contrary, since PM's seems to follow the Euro, and AUD, the possiblity of increasing Euro supply supports a negative PM outlook no? RBA cut 50BP yesterday, furthering support on this position.

Somone take me to school please...

Wed, 12/07/2011 - 10:04 | 1954481 Spigot
Spigot's picture

In brief, the $5 trillion slosh which is the planetary FX/Interbank liquidity ocean has found a new impediment on the part of those holding dollar positions to temporarily trade them for EURO's in the overnight market (interbank liquidity markets). So, the FED is providing swaps to keep the ocean moving.

Possibly dollar traders are becoming dollar holders, and for what reason?? Look at Europe's political actions against the financial markets over the past 6 mos. That will provide a few clues.

Wed, 12/07/2011 - 10:33 | 1954578 LawsofPhysics
LawsofPhysics's picture

Somewhat of a self full filling prophecy, but I agree.  Dollar traders have become dollar holders or buying physical assets of all kinds waiting for a drop that they will cause in order to get the next "deal" funded.  Like bloody crack whores.

Wed, 12/07/2011 - 10:07 | 1954494 Spigot
Spigot's picture

Hard asset markets are dominated by paper trades that have nothing to do with physical assets. Upwards to 100:1. The paper markets are an illusion, but since they determine/dominate the market, those paper trades dominate the pricing structure as well.

Wed, 12/07/2011 - 09:54 | 1954454 John Law Lives
John Law Lives's picture

Printing... rumors of printing... bailouts... rumors of bailouts... stock market kiting on rumors of printing and bailouts...

What a FUBAR economic reality this is.  Let's see some REAL economic news where millions of good new jobs are created whilst nations spend tax money prudently.  I guess those days are gone forever.  It sure seems that way.

Wed, 12/07/2011 - 09:55 | 1954458 falak pema
falak pema's picture

Europe as represented by Germany doesn't get it, you are right : Merkel does NOT want the market to dictate the spreads, as this market is a scam; CDS are scams, the regulators are totally corrupt as their treatment of UK market is absurd. In 2008 they saw shit all. Anglosaxon finance sector risks are horrendous, in UK and US sectors. Yet USD bonds have NO is true for UK which is not reflecting the spreads in Europe. The markets are being herded by the US cabal to run in THE specified direction. They may get Merkel's goat to get the whole world to kick the can towards global  fiat hyperinflation.

If this writer uses a sick market's knee jerk criteria as being the reaction of SANE market behaviour, he is comparing Nero's soldiers who burnt Rome with a natural phenomenun. This is a manipulated market and although the Euro construct is a total shit house it is NOT the only shit house. The market seems to look the other way on this latter issue. SO who is burning Rome? ANd what makes you feel that Nero's palace will not burn?

Europe does not get it? And the US does? and the markets based on naked CDSs, toxic unethical concotions, modern day Papal Indulgences, generated by these crazy PDs, sitting on a shit pile of synthetics, who think they be the Gods of Olympus! Where do you get your priorities from; Hades?

Wed, 12/07/2011 - 11:40 | 1954856 Optimusprime
Optimusprime's picture

+1.  You really nailed this one.

Wed, 12/07/2011 - 11:47 | 1954879 longonSpam
longonSpam's picture

This is too easy, Nero was a proactive Keynesian..

Wed, 12/07/2011 - 09:56 | 1954460 Everybodys All ...
Everybodys All American's picture

What you need to get Peter Tchir is that the people do get it and they don't want it. The powerful elite aside may want it but the people could care less about those chosen few. People don't want debt servitude to anyonenand when the debt gets this out of hand the better path is bk. Get it.

Wed, 12/07/2011 - 09:59 | 1954468 richard in norway
richard in norway's picture

people in europe dont get it, they still think that if they cut enough the markets will be happy, they are being decieved that this is about soverign debt and not the banks needing bailouts with printed money. i think the euro leaders has painted themselves into a corner they have been so succussful at distracting attention away from the banks that a program of printed money bailouts have become politicaly impossible


hell most of them think that the rating agency mafia goons are the good guys, its so fucked up

Wed, 12/07/2011 - 10:08 | 1954502 Spigot
Spigot's picture

The markets are already ripping Europe to shreds, but the job is not yet done. Then they will either head to asian or to the USA to do their work. Compacency will kill you in these times.

Wed, 12/07/2011 - 10:11 | 1954514 Dr. No
Dr. No's picture

Well obviously a treaty change doesnt effect the market.  The Algos only mine articles with "rate cut" or "bail out".  If you can get a headline abotu the treaty to also contain "purchase" the market will react.

Wed, 12/07/2011 - 10:13 | 1954521 eBuddha
eBuddha's picture

"The market cares about only one thing, that the ECB will announce new, bigger, more aggressive sovereign purchases"

and that is why the govt's method of kicking the can and dilluting paper currencies as their approach is dooming us.

instead of just letting reality hit us all in the face and then everyone dealing with it - our political leaders have been acting like horrible parents needing the doting affection of their children and spoiled them with sweet candies.

good luck to these assholes now trying to solve this because their ponzi-styled solutions have run out and now the problem is 10x and we're all going to be eating saltines for a decade.

Wed, 12/07/2011 - 11:02 | 1954736 Ropingdown
Ropingdown's picture

Why should Germany care that the market wants big printing?  Why should they care that Geitner wants big printing, just so the US can do the same next year without punishment?  The market want Germany on the hook for all the bad paper the market has bought, including about-to-go-bad bank paper.  So?  Screw the market. Treaty guarantees and structure or no money for you!

Wed, 12/07/2011 - 10:15 | 1954527 NEOSERF
NEOSERF's picture

Completely right...treaty changes, ratifications, more summits...just delay tactics; what the EU will need to do which is declare war which will allow them to ignore rule of law, treaties etc....and then have the ECB print like there is no tomorrow...

Wed, 12/07/2011 - 10:17 | 1954539 letitgo
letitgo's picture

No, it's the market that doesn't get what's really important, not Europe.  While Europe is busy thinking about bedding down the long-term with things like tighter fiscal union through treaty changes, the market only cares about short term asset prices and the possibility of making a quick buck.

People like the author of this piece need to understand that Europeans don't have massive amounts of personal wealth invested in the stock market roulette wheel like most Anglo-Americans do through pension funds etc, so are able to (rightly) care relatively less about the short term market implications and more about the longer term overall economic implications.

In a world less built on debt (including personal debt) and requiring people to save, live sustainably, pay taxes and do austerity, a tightly-integrated Northern-European dominated EZ might even outperform the rest of the developed world.  Maybe they know that and couldn't give a rats about how much TPTB lose in the ultimate bursting of the worldwide debt bubble.

Wed, 12/07/2011 - 10:51 | 1954686 Watson
Watson's picture

In a world less built on debt...a tightly-integrated Northern-European dominated EZ might even outperform the rest of the developed world.
If you replace 'Northern-European dominated EZ' with 'a new north-EZ consisting only of Germany, Netherlands and (very) few others', your statement may well be true.

But in that situation (which, personally, I think is quite likely to happen), what about the rest of the existing EZ?
Spain is bust, thanks to their RE collapse dominating everything else.
Italy could survive if they could ever get efficient tax collection - but they have been working on that since before entering the EZ, so don't hold your breath.
France will survive, but with enormous political upheaval from both (1) the blow to Gallic pride from the forced acceptance that their economy is _not_ comparable to that of Germany and (2) they will be forced to put a line through their agricultural subsidies (currently funded by Germany).

Just those three produce a lot of angry people.
It may well be true that, broadly, they have brought their problems upon themselves, but angry people can be a source of war.

Wed, 12/07/2011 - 11:58 | 1954924 oogs66
oogs66's picture

What the author wants and what the author thinks stock markets want and have priced in aren't necessarily the same thing.

As a whole way too much has been given to the market at the expense of the economy. Too many politicians have been tricked into believing that the economy is the market which is just wrong. If they focused on the economy the market would take care of itself.

Wed, 12/07/2011 - 10:18 | 1954543 DavidC
DavidC's picture

"The inability to hold yesterday’s rumor rally is a signal that the market has moved well past the short squeeze phase and is now trading long".

Uh? Can someone explain that to me?


Wed, 12/07/2011 - 10:24 | 1954556 Clint Liquor
Clint Liquor's picture

  Uh? Can someone explain that to me?

Maybe the following quote will help:

 “Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”


Wed, 12/07/2011 - 10:26 | 1954561 slewie the pi-rat
slewie the pi-rat's picture

get what?

that they need to protect themselves from failed zombie TBTFs by getting tf outa rigged markets and protecting their assets & selves from failing counterparties? 

many people haven't been slapped quite silly enuf to get it, yet

they still think "fiat markets are rilly cool; make lotsa money"

not all are sheep; we have donkeys, too;  very few "men" tho

what does "too big" mean?  what is too big?  if we think "balance sheet" we won't be far wrong

how "real" is a particular bal sheet? 

if you hafta ask, you might be happier and healthier taking up gardening, coin collecting, and bike riding rather than waiting for some american, italian, greek, german, japanese. chinese, middle-easterner, israeli, canadian, aussie, UN, or other bigshot to pull something outa his or her ass and then ask you to tell everybody how swell it smells

if ballooning debt is a problem, perhaps more and more debt is not the "solution"

if corporate structures and combines are "too big", maybe, just maybe, making them bigger isn't really even can-kicking at this point, any more

here's a slewie-thought for hump day, dump day:  TBTF = TB to Grow = Recession = Doom

it think people, esp americans usta understand that bigger = badder, but under the bushes and clinton, propaganda claimed that if we weren't bigger & badder, we would be at a competitive disadvantage, globally, not to mention in fields of danger and unable to command respect from lawless terrorists

how's that working out?  L0L!!!



Wed, 12/07/2011 - 10:29 | 1954569 SirPlayomic
SirPlayomic's picture

Yet more propaganda about how Eurobonds will save the day... Attention banksters! We don't want your damn Eurobond scam! It might levitate the markets for a few months, but that doesn't stop the exponential part of the exponential function!

Wed, 12/07/2011 - 10:30 | 1954572 Mr.Kowalski
Mr.Kowalski's picture

Oh they get it-- Merkel, Obama and Sarkozy just want to delay the Day of Reckoning until after they're gone. ETA-- early 2013. Until then, more of the same-- hot air. 

Wed, 12/07/2011 - 10:36 | 1954594 Zgangsta
Zgangsta's picture

If the market could care less about treaties, then it must care about them at least a little bit, in order to give themselves room to possibly care less than they already care.

Wed, 12/07/2011 - 10:42 | 1954631 DutchDude
DutchDude's picture

Here, in The Netherlands, finance minister isn't even talking about a treaty change because he doesn't want to wake any sleeping dogs demanding a referendum.

Fact is we háve perfectly fine rules layed down in the Maastricht treaty:

<=3% budget deficit, <=60% debt to gdp, no bailout etc...

only France and Germany broke those rules a couple of times.

The minor changes Van Rompuy announced won't be enough to satisfy the markets, more changes (the Merkozy plan) will take too long because of souvereign rules.

Every option will lead to an failure due to the markets or national conflicts because of breaking constitutional law.


Wed, 12/07/2011 - 10:53 | 1954688 jack stephan
jack stephan's picture

3 days of the condor is pretty tame to this, its going on 4 years of the condor, fuck.

Wed, 12/07/2011 - 10:58 | 1954717 RSDallas
RSDallas's picture


"I have been assuming that the meeting will result in another agreement to agree. That is relatively easy to pull together." 

This is exactly what is going to happen.  The European leaders know EXACTLY what they are doing and they know what the highest probable outcome is.  They are toast, broke and insolvent.  Europe will NEVER (never say never) get all 17 much less 27 different entities to agree.  Just think about the current hostages, Greece, Portugal and Ireland.  They have already agreed to certain austerity measures.  Do you think for a minute that they won't demand to re-negotiate their terms?  Then you have to announce to your Country that your Country is officially at the mercy of another Country, or financial board, presumably Germany and that this Country or entity now has the ability to DICTATE to your citizens what they can and can not spend THEIR own money on.  Think about what the leaders of Europe are trying to do.  All of the sudden a foreign entity can dictate another countries social programs, infrastructural and military spending.  That is SCARY my friend. 

We are witnessing the most prolific attempt at achieving what these conspiracy theorist claim as "The New World Order".  It doesn't seem to be too conspirator now.  We can only hope that the citizens of these Nations take to the streets, again, with a vengeance never seen before.  The Elites have OFFICIALLY pulled the covers back, stopped operating behind the scenes and have launched an all out attack on a huge swath of the World. 

Let us all pray that Europe is not successful at what they are attempting to do and the elite's throughout the entire planet are handed too them what they deserve.  A default resulting in the loss of principal!  I believe that ultimately this or World War III will be the outcome. 

Wed, 12/07/2011 - 12:38 | 1955078 Watson
Watson's picture

You don't have to worry.

For any of this to work, you have to have Germans policing the tax/budgetary activity of the French, a situation intolerable to the French.

So it won't happen.

Wed, 12/07/2011 - 11:03 | 1954739 GCT
GCT's picture

I think the European politicians are trying to get the USA to go all in to bail them out and then stick us with the bill by just defaulting.  I cannot imagine all the soverign countries of Europe giving up their soverignty to unelected decision makers for their countries with judicial immunity.  We always talk about Greece and how they avoid taxes and having lived in several countries in Europe I find that every country has an alive and well barter system as the taxes are stupidly high. 

I hope I am wrong but the more they talk about this problem the more I see this playing out or worse war. 

Wed, 12/07/2011 - 11:08 | 1954760 Greenhead
Greenhead's picture

"Many EU leaders seem to actually believe that the Treaty changes are important."

They are important to their narrative.  The European government leaders want to stay in their comfortable positions and maintain their status.  For that to happen, they have to keep the appearance of stability and growth.  If they have to force their populations to give up national sovereignty, well, so be it.  At least this way it's easier for them to continue to tax and spend and take the cream off the top.  They also have to keep the banks alive that lend them the money they use to deficit spend or to finance exports (Germany).  We help them because we use the same system here, only we can print and monetize if no one will buy our debt.

Piling on more debt and then declaring "Austerity" is going to be a trainwreck.  A lot of the problem now is the difficulty and inability to service and sell more debt at these interest rate levels.  Adding more debt by rolling over old debt and adding new to keep the economy somewhat juiced while implementing austerity packages will be interesting to watch.

Wed, 12/07/2011 - 11:16 | 1954792 Village Smithy
Village Smithy's picture

This comment from gives us a hint as to what to expect. "Senior German official says great interest in UK as active EU member". The problem children are going to be left to party on down by the Mediterranean, while the people who must endure long cold dark winters do their best to get on with facing reality.  

Wed, 12/07/2011 - 11:36 | 1954843 Optimusprime
Optimusprime's picture

Don't trust Tchir--notice the way he denigrates national sovereignty. 

Wed, 12/07/2011 - 12:08 | 1954964 taint
taint's picture

The trillion dollar German question hinges on the following:

Stick to the EU and bailout most of the cuntries or,

Leave the EU, go to the DM and watch the German export market detonate.  Don't expect many takers for a $100K C class benz.  

Ultimately this is simply just determining what is the cheapest and least painful to the German people.  Crap sandwich on the left vs the one on the right, either way much shit eating to take place.  

Wed, 12/07/2011 - 12:34 | 1955058 Watson
Watson's picture

They will take the second option.

'Detonate'? Really?
German goods were always very expensive under the DEM, and yet the exporters prospered.

Years ago HP successfully sold electronic goods at 3x the price of their competitors.

Moral: if you produce quality goods you move towards price-maker rather than price-taker.

Wed, 12/07/2011 - 17:41 | 1956365 taint
taint's picture

 detonate - maybe too strong.   Germany will lose its Euro trading partners as they fall to their old (and worthless) currency.   I think the Euro has created a mercantilist type imbalance in Germany.  How much they shed is the question to balance staying in the Euro.  If Germany loses the economic equivalent of 10 percent of its economy for 10 years?  that's $2.5 to 3 trillion Euro today!  keeping in mind that is a 10 year depression.  

Ordinarily I agree with the 'quality last longer than price' argument but Germany's Euro pals don't have any scratch and they surely will not be buying DM's with their new troika bucks.

We are quick on the Euro dissolution thing but given the two alternatives, you have to do the math first.   I haven't seen any analysis that pitches the argument in such a manner. 

Wed, 12/07/2011 - 12:19 | 1955008 dizzyfingers
dizzyfingers's picture

Apparently the USA doesn't get it either. Where's the evidence that it does?

Wed, 12/07/2011 - 14:36 | 1955554 bugs_
bugs_'s picture

I don't get it either

Wed, 12/07/2011 - 17:22 | 1955829 CTG_Sweden
CTG_Sweden's picture


Article (Peter Tchir):


"I still think the most likely scenario is that some agreement to agree is made at the summit, which is then followed up by increased printing from the ECB, coupled with new Fed policies and fresh IMF money.  Although that still seems the most likely, I am getting concerned that Europe is once again missing the point. 

Many EU leaders seem to actually believe that the Treaty changes are important.  The reality is the market could care less about treaty changes.  The market cares about only one thing, that the ECB will announce new, bigger, more aggressive sovereign purchases.  That’s all the market cares about.  The market believes that the treaty changes provide an excuse for the ECB and IMF to ramp up their efforts.  The EU can do all the treaty changes it wants, but if it is not followed up with aggressive new printing policies, the markets will sell-off.

Not only are politicians acting as though the treaty changes mean much, there is even talk about being able to implement changes without national votes." 



I think that Peter Tchir doesn´t get it: What is important for leading European politicians is not to solve this crisis as smoothly as possible but rather to strengthen case for a tighter fiscal union. The more serious crisis you get, the easier it is to persuade the public at large that drastic political changes are necessary. This is how leading Swedish politicians persuaded people in Sweden to vote yes in the referendum on EU membership: First the Swedish krona was pegged to the EU currency which at that time was called Ecu, and then they defended the exchange rate with a 500 % interest rate which resulted in a doubled national debt and three times as high unemployment figures. Then they said that we had to vote yes to EU membership in order to avoid such problems in the future.


If you have a strong political brand name you can get away with almost anything, provided that the big media, which also got good brand names, supports you. It is so easy to fool people.


I also think that the readers should keep in mind that the success of a certain ideology, a set of similar ideologies, political parties, a group of similar political parties e t c is not directly linked to how successful the economy in a country really is. Poor countries can be ruled by socialists and right-wing capitalists for decades. Rich countries can have very high taxes and a socialist touch, like Sweden in the 1970s and 80s or have low taxes like Switzerland. Both socialism and capitalism can win in a country that gets poorer.


The current EU leaders have neither in the past nor more recently prioritized the long-term prosperity and the living the standard of the EU and its member countries. They prioritize other political objectives, such as turning the EU as socialist or capitalist as possible or turning the EU into a tighter union.


Wed, 12/07/2011 - 18:02 | 1956445 AAA21
AAA21's picture


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