This page has been archived and commenting is disabled.
Europe: "It's Like Asking A Bicycle Repairman To Fix A Jet Engine"
Get the feeling that in the past two weeks Bazooko's Circus has come back with a bang? You are not alone.
From Newedge:
Last thing I asked before I went traveling was "try not to break anything" while I’m away. I get back this morning and it looks like a bunch of teenagers have had a particularly messy drug-fuelled rave in the market’s front room. The day-on-day charts hide the roller-coaster ride we've seen on the back of the Euro. Bond markets are in lock-down awaiting what-ever-next “liquidity bomb” the authorities can find to drop. Aside from some minor bond crosses, there has been zip activity outside zero-coupon bunds, gilts and treasuries. There is more liquidity in the Atacama desert.
And the mood has changed. I’m concerned at Draghi’s increasingly open direction – his espousal of radical ideas and his suggestion Eurobonds are closer than we think looks like a head on collision between the ECB and Germany is on the tracks.
On the investment side, it’s not about trying to lighten up positions that might widen if the Euro crisis deepens. Now investors are looking to sell whole portfolios on redenomination risk. You might be confident that block of Cedulas pays back at par. You just don’t know what currency you might get 100 in. Two excellent notes by David Oakley and Gillian Tett in the FT are well worth a read on the scale and form of investor fears.
Yet it’s not all doom and gloom. Although there is entirely justifiable anger over what’s happening, there is also cautious optimism on the future. No matter how hard the Euro Elites, over-zealous regulators and other parasites of this modern financial age strive to wreck markets, there must be opportunities – and the upside is coming. What will drive it? The next rabbit the ECB pulls out the hat? Don't know what, but it's Boy Scout time - Be Prepared. The news and environment gets remorselessly worse… which means at some point the mother and grandmother of all rallies is on the cards! What might it be? More SMP, a renewed LTRO 3, growth policies linked to proper European QE?
Stories in the market suggest recent upside in Euro govies is largely technical on the back of the Swiss National Bank neutralising CHF sales. Makes sense - I can't see any fundamental reasons for demand at this time. The Russians say Greece already has plan C - a parallel currency. That'll work, they are already in some kind of bizarre parallel universe!
Its 5-years since the sub-prime crisis first became apparent, so it seems extraordinary we are mired in increasingly volatile markets. What makes this crisis so difficult to put back on track? At the moment it feels pretty bad. Greece, Spain, Italy, Hollande et Merkel, Eurobonds, deposit-guarantees, pick and choose your poison. Overhanging the negativity remains the "still can't believe it" losses at JP Morgan. Get over it. You can't ever underestimate the basic human capacity for delusional stupidity. It happens and will happen again and again and again. That's why banks hold capital.
Yes, there was a time when banks held capital against their investments in assets they knew like corporates, mortgages and retail lending and do things they were good at. They made the mistake of getting over complex and the resulting crisis of 2007 gave regulators the chance to move up from repairing punctures to servicing Mach 2 jet fighter engines. And haven’t they done a good job.. billions of unreadable pages of finance-ocrat verbiage has made markets worse and less efficient. Regulatory compliance, risk-reporting and tick-test filing departments greatly outnumber bankers on the ground. Overnight then regulatory nonklematura drew up draconian new liquidity rules forcing banks to load up on sovereign debt, killed liquidity by a slavish insistence on dangerous irrelevances like Mifid, and destroyed market-making by declaring trading a dangerous speculative heresy. Killed what they didn't understand. (Actually, as JPM just demonstrated... neither did they!) Brilliant: the ultimate regulatory success - nothing will go wrong because they've effectively closed the markets.
Since 2007 only one major investment bank has actually gone bust - Lehman - but today you can count the number of real fixed-income investment banking market participants on a single hand. The days when a veritable host of banks competed to top the Eurobond league tables, to advise and trade on behalf of investors, seems like a dim remembered vision of paradise lost. Great opportunity for brokers like us – but at the moment liquidity is pants.
And yet regulators and the Euro Elites are so insensitive to reality they have the temerity to declare "Markets are Malfunctioning." Which is completely bottom over chest.
King Canute was a particularly successful Danish/English king. His fawning court tried to curry his favour by suggesting such was his power and fame he could command the sea. Canute famously sat on his throne as the tide came in, told the waves to stop and smiled as his feet inevitably got wet.
Canute understood the sea obeys no one. It reacts to immutable forces - the moon's gravity, tides and currents. Markets are similar. They react to the tides of regulatory bollcocks, the gravity of politics, the currents of fiscal and monetary policies and growth. When markets mal-function it's because of the environment - traders deciding to short the bejesus out of France are simply responding to the environmental inputs.
Sort out Europe and markets will work. But, of course, Merkel is absolutely right to reject joint and several Eurobonds until fiscal union becomes a fact. If they were launched today, it would simply be a massive trade down to the lowest common denominator. The German electorate won’t be fooled if German funding costs move from the current 0.07% to same level as Spain...
To paraphrase:
h/t converttrader
»
- 8035 reads
- Printer-friendly version
- Send to friend
- advertisements -
but...but... eurobonds would be sooo nice for traders' and banker's bonuses! who cares that they would not fix anything...
The plan is for a "euro Fed." and I take note French yields are now plunging with the value of the principle soaring as a consequence. "move along. move along."
question, if i may...if the news over this long holiday weekend finally comes, that greece is out, and the currency situation changes in some way....would you wished you bought a few more ounces today or glad you waited till tuesday...i have heard that other things are sold in ounces but for my question i am re-efering to gold and silver.....thanks
I think whatever develops is USD positive for the short term (next several months). PIIGS will default, ECB will print, markets will implode, USD will catch a bid.
So I think PMs drop in USD terms.
After that... We get The Big Print. Right before the election if Obummer is going in, after if Mittens is going in. If Paul gets in by some miracle, I think everything tanks but PMs soar.
Hold onto your nutz, bitchez!
I suspect the $ bounce will be short-lived. The leaner, meaner Euro will soon drive the $ back.
its the fetzer valve.
Ghordius - Good to see you back. Eurobonds will also mean a new supervisory Directorate in the European Commission. More eurocrats, and self-preserving highly paid responsibilities.
We're losing altitude...pedal faster!
..after we land, we'll go steer the train like it's a car to "add value" to the US economy.
Salvadore Dali would have enjoyed watching the current mess.
Yes, that's the real reason the EU / euro was created to begin with. Another way bankers could make boatloads of money from interest and fees and leverage and trading and speculating.
The euro didn't help Europe at all, but it helped bankers immensely, giving them a whole new market of debt and securities and derivatives to make money from.
The euro is just another way bankers loot wealth from the people, just like the US dollar and every other fiat currency.
Of course they want eurobonds now. More debt and interest and fees and trading and derivatives to make money from.
THAT'S why they keep kicking the can. That's why they don't want the problems fixed. They want more and more debt and securities and derivatives so they can make more and more money.
Bicycle Repair Man.. Hmm.. Where have I heard that name before?
Jet engines without jetfuel; a tale of the years to come. We'll be riding bicylces and looking desperately for Susan, the bicycle repair woman!
Not quite. Where would you get Greece, I mean grease :)
And rubber?
Dead fat people?
repair women can be very proactive; more so than men; they have no foreskin but they know how to have fore thoughts. Fore!
Some women I knew could have only four thoughts. Four!
Thats three more than some men!
I can't chew gum and walk at the same time. I excel in my looking and pointing skills though.
I was hoping he'd be the first to catch this article and do the "Here I am thing" :-)
ori
Look how he uses a spanner to tighten that nut.
"ALTER SADDLE!"
"And yet regulators and the Euro Elites are so insensitive to reality they have the temerity to declare "Markets are Malfunctioning." Which is completely bottom over chest" - mmmmh, interesting view bunching regulators and "Euro Elites" together...
are they disturbing God's Own Work?
There is no regulatory capture in Europe?
Europe: a disparate bunch of tribes masquerading as a superpower. They can't keep up that front for much longer. Better to go back to our caves and unending wars with each other.
smartiepants, who is "masquerading as a superpower"? superpowers have hundreds of military bases outside their borders and ICBMs. and don't allow foreing bases inside their borders
That's not a superpower. That is an empire on the verge of collapse. See the Soviet Union.
I know this is hard to understand from the outside: the european model is that of a Confederation.
And before you start with (some hopefully funny comments on) the CON part: it means members can leave.
Fully agreed. I'm just saying that the US is not a superpower. In fact, I'm saying our definition of the word is grossly incorrect. The attributes we attach to the term are all equivalent to those we ascribe towards a collapsing empire.
You're not a superpower when you're going around the world begging other nations to buy your treasuries and keep your currency from collapsing.
USA a superpower now gone financially tribal masquerading as world policeman on borrowed money and broken power model; whose is worse, the shit house of Euro or the Augean stables of greenback hubris?
Its the end of 1492 world supremacy model.
The sole superpower in the world just crossed $119 trillion in unfunded liabilities. In case you missed the celebration, you have to wait just 54 days to reach $120 trillion. And precisely on that day, US debt will cross $16 trillion.
You cannot be a superpower without super debts.
54 days to reach $120 trillion.
_____________________________________
Make it 53 by throwing a gigantic party to celebrate the event.
You cannot be a superpower with super debts.
As much as I'd like to agree, there is an historical precedent to that: the Spanish-Portugese Empire under Philip II: super-debt, three defaults, several armadas (Brits often focus on one of them) sunk by storms while trying to land in England, a long engagement to Elizabeth I, endless wars against rebel Dutch and a dozen muslim countries...
If you have the armies, the navies and the will, you usually find fresh creditors...
Philip II had the silver mines, this empire has the oil wells...
Guys, guys. I did say 'masquerading' as a superpower! That means 'pretending to be' for all of you out there with no dictionary.
Have you guys read Jim Willie's Latest piece?
http://www.marketoracle.co.uk/Article34819.html
Would love to hear ur comments..........
Wow. Heavy. Like JPMorgans losses. Articles like this scare the shit out of me. Pity that WW3 is going to be over who controls the printing presses and who pushes the magical interest rate swap buttons. Kind of lame.
The alternative trade settlement systems are coming online, with bilateral swap facilities, settlement in gold, and eventually a rival method to the SWIFT bank settlement. Nations are actively seeking out the alternatives.
It is going to be the most dangerous and exciting event in modern financial history, that climaxes with the death of the USDollar and announcement of the USGovt debt default.
This is exactly what I've been saying last few months (go look at previous comments), but I arrived at this conclusion from a different angle, USA locking Iran out of the SWIFT system, forcing China and other asian nations trading with Iran to develop an alternative trade clearing system using an alternative currency, likely a new gold-backed currency of some kind for stability USD doesn't have.
That alternative currency and alternative clearing system will be adopted en masse by other nations around the world, collapsing use of the US dollar in international trade, collapsing the dollar, collapsing treasuries, and the whole American financial ponzi scheme comes crashing down.
Willie and I arrive at the same conclusion, death of the American financial ponzi scheme and death of the dollar, just from differnt angles.
He says there will be currency war. I disagree there. When a new stable gold-backed currency and a new trade clearing system is launched by nations with huge nuclear arsenals, the US dollar will die instantly, and there won't anything the US can do about it.
Yeah but... Whats wrong with bicycle repairman fixing a jet engine??!
This is Europe! We do things a bit differently here!!! LOL
more like bicycle repairman defusing a daisy cutter bomb
because anyone who has a clue about bombs will be running miles away...
DO NOT make light of Bicycle Repairman
http://youtu.be/U01xasUtlvw
"In 2008 we had a financial crisis. Next train station will be when governments go bust and I believe in the Western World they ALL go bust! Before they go bust they will print money and then we go to war and then all of us will be doomed" ~ Marc Faber, May 2009
We know that, but in the meanwhile someone has to provide the comedy.
I am long hilarity too.
What will YOU do in the next war daddy?
(Excluding the Israeli/Iranian imbroglio)....war with whom vs. whom?
Unless the war in the Middle East expands (again, the distraction nukey Israeli-Irani you can't have-e).....who?
Over what?
Oh I know...media can stir up some shit and mis-lead the masses.....but....
We now have this medium...and too much truth and knowledge has come out.....and once it's come out.....impossible to put back in.....
Moreover, MUCH harder for governments to lie and deceive - TO GIN UP IT'S PEOPLE FOR WAR....
...when the masses are flat plain SICK OF WARS.....
The only "war" I see forthcoming is the war on banks, and politicians to get straight and stop lying - and that is country vs. it's own country's "TPTB"......
The difficulty to ignite larger scale wars does not beget to US citizens being sick of wars.
US citizens are by default pro war.
The difficulty lies into a very simple fact that no one in power can ignore: US citizens own or control 85 pc of the world resources.
Wars would be damaging in this context, blowing up yourself. Not much left to be conquered through war.
Solved nothing by the way for US citizens, contrary to their claims.
A few pockets remain like Libya for example. Was quickly dealt with.
(Excluding the Israeli/Iranian imbroglio)....war with whom vs. whom?
It wouldn't be just Israel vs Iran.
It would be USA & Israel vs Iran & Russia & China & India & Pakistan & North Korea and every other nuclear power they get on their side. It would be all out themonuclear WWIII.
The US is already at war--Afghanistan, Iraq, Libya, Egypt, Syria.
All we need now is another "terrorist" attack on US soil, and people will be crankin' up the Lee Greenwood and clamoring to "go kick some ass"; with other people's kids doing the fighting, of course.
A country that is collectively stupid enough to choose Robomney over Ron Paul deserves what it gets. We're CTD, folks.
Industrial nations are bust, they are printing money, they are at war - outside their borders. We are doomed, this is only 2012, the throes have some way to go.
Europe: "It's Like Asking A Bicycle Repairman To Fix A Jet Engine"
Aaah you'll be talking about Davos
A meeting of the brightest minds in global banking, finance and politics ...the Annual Pilgramage to the Village Idiots Competition in Switzerland
Past winners include Jean-Claude Trichet, Ben Bernanke, Mervyn King and every Govt Treasury Dept in the Western hemisphere
The component that no one is Velocity of money is slow as whale s*** due to a multitude of reasons. Doesnt matter how much liquidity is out there if no one is using it as evidenced by recent meager lending by banks, mattress stuffing overseas, and the bulls*** employment data that keeps consumers scared.
"It's Like Asking A Bicycle Repairman To Fix A Jet Engine or like asking Obama to act like a President"
Not just Europe, Japan and US too. Amazing that QE3 is being considered. Definition of insanity - same thing over and over - QE1, QE2 - expecting a different result.
Hmm... actually QEs ARE the result of this financial system, the end product. The whole reason is financial system was enacted.
Once you get the perspective right, all thigns make sense.
Germany should invoke Article 146 and call a referendum
not like the Irish or the Netherlands or the last Greek referendum call. Why should Germany be different ?
Artikel 146
Dieses Grundgesetz, das nach Vollendung der Einheit und Freiheit Deutschlands für das gesamte deutsche Volk gilt, verliert seine Gültigkeit an dem Tage, an dem eine Verfassung in Kraft tritt, die von dem deutschen Volke in freier Entscheidung beschlossen worden ist.
The Word Of The Day is "nonklematura"
"nonklematura"
nomenklatura ?
"It's like the paperboy being promoted to CEO of the NYT."
-Barack Obama.
Hopeless Change 2012
For now they keep fleeing to the "almighty dollar". At some point our mask will come off for the whole world to see just how many scars we have. The flight to gold will also be a bank run, but to gold and silver, not the dollar. I would not want to wait till next week if I did not have my stash at the ready. I don't care if gold drops another 100 dollars or so. It is the end game that we are preparing for, not next weeks trade. How is it possible for us to come out of this any different than what is going on in Europe. We will print, and print, unti "the funding crisis" hits. And mark my words, it will take the printing press away from the head inmate. When that happens at some point in 2013, or 14, then for us.....Game Over.
Do not wait to prepare if you are able. You go to sleep and all is well....you wake up, and it is too late.
GR exit 06/02? http://www.efxnews.com/story/12752/grexit-imminent-rumors-it-will-talk-place-june-2nd3rd-btmu-others
Very interesting link. Thank you for posting it.
Speaking of "Jet engines",I wish these American Military jets would stop spraying me with Chemtrails all day and night long.
Do you's all not mind...????
Or do yous not notice.........??????
Wake up ......
Tell your friends and family about it if they do not notice.
All my weather comes in lines............
Fuck Off USA Military
Aprox.194 countries signed a pack about two years ago to stop the USA from spraying.That didn't stop the Gov. from doing anything.I wonder how much the cost is per year?
Bankster,lookup.also civilian airliners.
Merkel is absolutely right to reject ... The German electorate won’t be fooled if German funding costs move from the current 0.07% to same level as Spain...
another merkel circle-jerker?
from the totally unique perspective of slewienomics, it appears that german funding costs may be hidden in the suspense account ponzi aka targetII
so yeah, those germans are almost too fuking smart for their own good, if ya were2 ask me
b/c the banksters really do care abt germany; let there be no mistake made about that!
My guess when the crash happens they will choose the Jeff Spicoli Plan:
Make it look like some else caused the crash and let the victums blame the wrong group.
[Fast times at Ridgemont High - Or Fast times at EU High]
Jefferson's Brother: My brother's gonna kill us! He's gonna kill us! He's gonna kill you and he's gonna kill me, he's gonna kill us! [gov't]
Jeff Spicoli: Hey man, just be glad I had fast reflexes! [central bankers]
Jefferson's Brother: My brother's gonna shit!
Jeff Spicoli: Make up your mind, dude, is he gonna shit or is he gonna kill us?
Jefferson's Brother: First he's gonna shit, then he's gonna kill us!
Jeff Spicoli: Relax, all right? My old man is a television repairman, he's got this ultimate set of tools. I can fix it. [central bankers]
Clearly, the EU officials are past the point of "we have the ultimate tools to fix this", and now will turn to plan B, make it look like someone cause the crash! Northern Europe leaders will blame the south for running up huge unsustainable debts. The South will blame the north for not permitting them to spend there way out (forcing austerity). The end result is a lot of angry europeans on both sides. The last time they were this angry was about 100 years ago.
...and then bicycle repair man is off to fix Starship USA.
In the US Navy I was a Gas Turbine Systems Tech and one of two US Navy certified SCUBA Divers assigned to that ship. In my retirement one of my hobby's is repairing bicycles.
I laughed when I saw the headline of this article because I'm a heli mechanic and about 2 months ago we got a part time guy in the hangar whos previous job was working a bike shop to pay his way through college. Can't make this stuff up...
I'm not sure I understand Mr. edge's point.
did you see what Goddddddd just did to us mang!
This was a completely dumbass article.
I prefer Neal Stephenson's version: "He looks like a lower primate trying to fly an aeroplane."