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Europe's Most Parabolic Chart Goes Parabolic-er
Two weeks ago, we showed that when it comes to parabolic charts, Europe sure has a variety to choose from. Yet none are quite as parabolic as the chart enabling it all: the Bundesbank's TARGET2 claims toward the rest of the Eurosystem, or as we have repeatedly explained (and as Jens Wiedmann confirmed), the sunk cost that Germany will have to foot once the Euro experiment ends, and the EMU falls apart.. which judging by recent developments in Greece, and now Spain, could be as soon as in a few weeks. The number as of April 30? €644,182,010,456.05, which is exactly 25% of German GDP, and an increase of €28.6 billion in April and €181 billion in 2012 alone! Putting this number in perspective, imagine that the Fed had "assets" totalling $3.85 trillion that everyone knew are totally worthless, and meant that it would have to print a like amount in fresh money as replacement "capital" when D-Day came. This "money" represents a receivable that the Bundesbank will never, repeat never, get back, once Greece exits the Eurozone, and sets a precedent for all the other insolvent European countries, leading to the end of the European monetary experiment. It also means that the asset base backing the liability side of the Bundesbank will soon get obliterated. So the real question is: do German taxpayers feel like sinking costs which will never be repaid, and which serve merely to preserve the myth of viable German export markets, thereby keeping the illusion that the German intra-Eurozone export industry is alive and well, while in the process obliterating the balance sheet of their far more prudent central bank? Or will the German population say "genug" and force the Bundesbank to stop funding the current account deficit ways that it has been enabling for years? The choice is theirs. Just don't come crying to the Fed when this number is 100% of GDP and everything falls apart.
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http://www.youtube.com/watch?v=mRWZoCqnDhE
Monty Python - Hilter
http://www.youtube.com/watch?v=47V1qM0mRqY
Cleese makes a good jumbo sized Hitler and Palin makes a great Himmler.
Regarding our German friends, if perpetual slavery to an un-repayable debt burden is good enough for us, it’s good enough for them.
Nice one!
Too bad almost nobody outside ZH can laugh with me - which people know what rehypothecation and LTRO really mean...
Yes, agreed!
What did we do four years ago?
Thanks ZH. Waking the sheeple up since 2009
I hope to to see your 4 birthday and many many more.
What's the big deal? It's just a runaway exponential equation. You never reach infinity. It's all good.
and given that I've seen a lot of charts that look like that lately, that must diffuse the effect ...right?
Roger that! The one of unemployment under 25 follows this one right off the top of the page. No kids working ... no ponzi.
So it has "assets" worth 1 odd trillion that are utterly worthless now. What's the fucking difference ZH?
I think that's his point. What's the FUCKING difference? (rhetorical question of course)
I was gonna say ... that does not require much imagination at all.
Two years or $2.85 trillion?
It's amazing how fast debt disappears in hyper-inflation.
@zorba THE GREEK
Not sure if serious.
Since debt is money, you could substitute the word debt for money. But in the case of Zimbabwe the money both disappeared (went to zero) and simultaneously people were drowned in money ($100,000,000,000 for three eggs).
Fiat money is a curious beast because more zeros can always be drawn on it after the "1" but eventually it returns to it's intrinsic value of just zero. No topic is more interesting for thinking men to study.
Yup, just as Jim Sinclair explained. It all happens at the same time leaving deflationists only half right yet completely wrong.
Amazing that after a decade of inflating away debts that the deflationists still believe in it. If inflation and deflation played in a baseball game, deflation may win a few innings, but the "survival" of the system is linked to inflation winning the game.
Do you you understand the strategy of the mega financial interests that control the Federal Reserve?
It isn't a baseball game, it is a game of insiders making a play for power and control over reality.
Do they get that be hyperinflating their trillions in debt ownership and cash and bailing out debtors?
Or do they finish their monetary looting operation, bust main street, roll up their assets under their corporate fronts take the nation into receivorship?
Sun Tzu said you have to understand the strategy of the enemy or you will be defeated.
But it still has a BTU value.
Hungary likes this.
http://rt.com/news/cash-burn-hungary-bank-981/
Man, at least we have fuckin trees. I can hear the musical now....How many billion for a B T U?
I bet I could get a real tan over there in Zimbabwe. But seriously, Can i?
"It's amazing how fast debt disappears in hyper-inflation." (Zorba)
Wheelbarrows also disappear if left unattended.
So, "Money Heaven" then?
Vaporized, MF global style...
Corzine should be on the US $100,000,000,000 bill, flipping us all the bird
The money gets "southparked"...
Aaaaand it's gone.
http://www.therundown.tv/videos/misc-videos/south-park-and-its-gone-scene/
Stan: "Wait I had one hundred dollars"
Banker: "Not any more you don't......poof"
That's not money heaven. It's just the rules of monopoly. At the end of the game the money all goes back into the box. Nobody gets to keep it after the game is over. And the game is nearing its end.
in that case i m going to the bank and i will indebt myself like hell!!!
To da moon, Alice!
But that is the WHOLE IDEA!!! The Americans run to rescue their European Brothers and Sisters - for the good of Humanity.
And, thus, To da Mooon, Alice!
Too bad. It was fun getting free stuff from the idiot mercantilists while it lasted.
May be the best investment right now is to buy things you will consume in the future and fill your house up to the roof
By the way, that's not parabolic. It's a power function. This graph can only be flattened on a logarithmic scale.
http://en.wikipedia.org/wiki/Parabola
or 1/x
It is also exponential e^x a real exponential function crosses the y intercept at (0,1) and then increases to a factor of e^x
"do German taxpayers feel like sinking costs which will never be repaid"
Kind of like every bailout since they started in 2008? Answer -- no, but it doesn't matter. Most people don't know what's going on and they will blame someone else.
Damn those Greedy CEO's and their bonuses!
Its their fault.
@LetThemEatRand
I literally chuckled. Very cathartic. Thank you.
Nice stroke. That shut him up. Lol.
Like blaming the bankers and the military spending all the while inifinite plus one unfunded social obligations the world over is at the bottom of everything?
Wow what a mirage of credit and leverage
I guess the lesson is that you cant run permanent surpluses and loan the surplus back to deficit countries to buy your shit. It ends at some point.
Has china learned the lesson yet?
I'm pretty sure the Chinese Poliburo is more concerned with keeping the serfs employed (however poorly) and themselves in their phoney-baloney jobs, than the ultimate value of paper promises.
Have we?
Your comparison to the Fed is stupid. If the Fed has assets that turn out to be worthless it does not matter. Insolvency for a central bank in a fiat currencty system is an oxymoron. It prints its way out of any deficiency. Get a clue.
Yes, yes, infinite debt = infinite printing = infinite prosperity. The MMT blog is just down the street
Right on TD my brother. Where do I sign up for my infinite SNAP card?
Not endorsing printing or MMT, Tyler, the point is that Bundesbank cannot print, making their bad assets a genuine solvency issue, not comparable to the Fed.
Once the euro comes to grief the Bundesbank will again be granted the power to print. The german government will have no choice.
Why everyone in Europe isn't rushing to get their hands on as much physical as they can is beyond me. If the crash back in 2007 couldn't stir these people to research the monetary system, what will?
Or, more likely, Germany will be forced to support large scale QE by the ECB. Why any European would keep assets in Euros is the mystery to me.
Because the Assets are Encumbered by Debt. Funnily enough Assets are hypothecated. Double-entry Bookkeeping is all the rage in Europe, does it exist in places like the United States where Debt seems to float free of Assets ?
I quietly chuckled to myself.
Double Exit bookkeeping. Can give twice the amount out figures.
When confidence is the only backstop for currency, central banks must instill confidence.
How's the Fed doing?
In these parts people who once thought things would always be the same now believe things can get much worse.
Modernized nations melting down right before our eyes.
Confidence is waning, even as increasing numbers of people begin to recognize USD hegemony is collapsing.
Being wrong would not be awful, but as the transcendent philosopher ricky Bobby once said: "Hang on baby Jesus... It's about to get bumpy".
And think in 1 . 2. 3
Exter's pyramid stranger
areopagetica
Does your checkbook work that way?
If not, what does it mean to your checkbook if the FED checkbook works that way and yours doesn't?
Hmmmm.....
Again, the point is simply that the Bundesbank's checkbook does not work the way the Fed's does and I am not defending the Fed. Whatever you think about the Fed, if the Bundesbank is loaded with bad assets it has a problem of an entirely different nature than the Fed would have because the Bundesbank cannot print. The issue with the Fed printing is potential inflation, not insolvency.
Thanks for the distinction and the cogent reply.
Will the Bundesbank protect the Euro?
Would they be better off letting it fail?
Also, the FED is bailing out the Bundesbank and the Euro and the ECB with currency swap lines, bailout, and propping the Euro (and who knows what else).
I see your point. Hard to say if Germany will be the first, or the second to last, to leave the Euro. I believe France will be last.
"The issue with the Fed printing is potential inflation, not insolvency."
If insolvency if the inability to pay back debt, then money-printing and inflation are simply another form of not paying back debt. The printing is just an attempt to pay back debt with worthless crap which nobody will be willing to accept as payment.
If a nation is unable to pay back debt, and tries to come up with a scheme (printing) to try to fool everyone into thinking they are solvent, then are they?
No. They are still insolvent.
I'm not sure that the last desperate act of printing is not just a form of insolvency. In which case, everyone in this thread above probably agrees. Arguing over semantics.
Germany has undergone 5 Currency Reforms since 1900.
French franc's purchasing power fell by 70% between 1915 and 1920 and by a further 43% between 1922 and 1926. After a brief return to the gold standard between 1928 and 1936, the currency was allowed to resume its slide, until in 1959 it was worth less than 2.5% of its 1934 value.
franc's purchasing power by 70% between 1915 and 1920 and by a further 43% between 1922 and 1926. After a brief return to the gold standard between 1928 and 1936, the currency was allowed to resume its slide, until in 1959 it was worth less than 2.5% of its 1934 value.
when the Euro replaced the franc on 1 January 1999, the franc was worth less than an eighth of its original 1960 value
Perhaps this 'worthless' stuff is quite worthwhile after all. When Germany returns to the Dmark the Bundesbank will use all this worthless crap evaporating as the reason they need to print. Thereby devaluing the Dmark and allowing their exports to remain competitive.
Wouldn't it be ironic if the inflation-phobic Bundesbank ends up 'going Weimar' a second time, after printing over the €644 billion hole left in its balance sheet when the Eurozone blows up?
The truth is stranger than fiction.
And the out-of-control, accelerating exponential growth in Germany's uncollectable TARGET2 credit balance tells us that the weakest Eurozone link is about to break spectacularly, probably in a matter of months.
Sober-sided Germany might as well buy a Mega-Trillions lottery ticket -- it offers about the same probability of paying off.
That's what I'm saying. The inflation is being planned in advance.
'going Weimar'
What does that mean ? Two years of Inflation ? or 5 years of Deflation ? Communist Uprisings ? Unemployed ex-Soldiers ? What does "Weimar" mean ?
You use it as a flip commentary but forget Weimar melted down because the US withdrew funds from Germany to invest in the US Boom/Bust and France was sucking in gold until France and USA had 75% global Gold Reserves. France set out to destroy Germany economically and Bruening's Deflation helped achieve that.
The similarities with economic policy of the 1920s and 1930s are NOT superficial - but ask why they were repeated
Is that the 2005-2015 silver chart ?
Will I be able to get a Unimog for cheap now?
Mercedes Benz fehrt jede sternz,
Unimog fehrts lumpenpak!
Did anyone catch this?
Inflation-wary Bank of England to halt money-printing presshttp://finance.yahoo.com/news/inflation-wary-bank-england-halt-230511247...
Is this where the tide turns and interest rates get notched up?
Seems that London, being the financial center of the universe, kind of sets the tone.
Hypothesis: it's a globally-coordinated CB QE pause to see how bad it might get if no one is diluting the currencies, as now we have what appears to be all big western CBs holding off.
This might be the test that confirms what they already knew but need the markets to realize as well: no printing means a tanking market.
Of course, this is the same story that ZH has been saying for months.
@ HBS: "if no one is diluting the currencies....."
and when exactly does that event begin?
"Inflation wary "
And
"Bank of England"
Should not appear together
Right. Wait until the FED starts printing in earnest or wait until the pain gets bad enough. Austerity is like quitting cold turkey. Ask anybody that has quit smoking how that feels. Sadly enough, cold turkey is the most successful way to do it.
Is this where the tide turns and interest rates get notched up?
I suspect this is just an attempt to jawbone commodities down before they re-open the spigots. I mean, what choice have they got? Any government that allows their central bank to permit deflation (ie, 'austerity') is going to get thrown out of office.
'the EMU falls apart.. which judging by recent developments in Greece, and now Spain, could be as soon as in a few weeks.'
Really? I was hoping for an earthquake, meteor strike or false flag to keep me from having to do real work.
How long will the German people agree with the cornholing?
Until they bleed...it's gonna hurt a bit.
Exit of the Euro will inevitably increase the demand of US$ which will hinder the economy. Therefore, QE3 is much more likely if Greece exits the Euro.
Is it because the increase in the dollar will hurt exports or soaking all those dollars will cause deflation?
nothing is more beaitiful than reality
Mr. Panos: Financial "Crisis" in Greece
http://www.addfunny.com/videos/funny/13634.html
.
thank you zerohedge for this link, forever in
your debt, so to speak.
.
these central planned fiat regimes have fundamental
internal contradictions that can be overlooked but
only briefly and then more briefly and then ...
no overlooking allowed.
"Claims?"
Are those like farmers and little old ladies assets with MF Global?
Wehrmacht, bitchez!!
And they just finished paying off the debt from the Treaty of Versailles year before last!
Does anyone know why Russia's interest rates jumped so much today??
LONG EQUITIES & GOLD
http://change-in-trend.blogspot.com/
Something to do with Ukranian girls', the passage of gas, turnip prices & maybe, just maybe inflation creeping up? Shoot me down in flames.
I think the German people will cut bait. Spain, Italy and, next up, France are too much to swallow. It's he Battle of the Bulge again and they're getting pushed back.
Never did think the Germans had the stomach for enforcing EU tax collections from rebellious vassal states. They're already getting punked for that whole silly NAZI thing, even though they swear they were not really that into it.
The Germans have options. One is to move closer to oil rich Russia and dump their deadbeat EU partners. This was predicted couple of years ago by an economist who said Germany couldn't carry the whole EU and would have to explore alternatives such as looking East. Looks more plausible now if they want to sell those ulimate driving machines.
Germany: Who's crying now, Bitchez!
That perception has been the driving force in German policy for three years. They are terrified that they'll be dragged down by the burdens of the periphery when what they need is to to free themselves to connect with Russian resources and compete in Asian and North American markets. And when I speak with periphery people, including politicians, they all seem to think Germany is trying to dominate them. Bizarre. There is no profit in dominating them. They don't get it.
Sweet! The game of global monetary chicken!
I'm confident everything wil be fine.
This time is different. We have our best people in charge. History will not repeat itself. Buy more FRNs. They're all papery and green and iYummy.
/sarcasm off/
We're fucked...
+1 for having a name based on an arch-daemon from AD&D. Win.
Yes, but a -1 for tan lines...
...looks like the spike at the Mad Cow lab. http://www.youtube.com/watch?v=gl8pMjaxm_s
The great export engine exposed....
ZH: "Do German taxpayers feel like sinking costs which will never be repaid, and which serve merely to preserve the myth of viable German export markets, there by keeping the illusion that the German intra-Eurozone export industry is alive and well, while in the process obliterating the balance sheet of their far more prudent central bank? Or will the German population say "genug" and force the Bundesbank to stop funding the current account deficit ways that it has been enabling for years?"
Certainly we do. The "Target-II-discussion" is an open quarrel in more and more newspapers, even TV-medias are reporting more and more (thanks to Jens Weidmann). Citicens are becoming increasingly sensitive, although the big majority still remains untold. Tomorrow afternoon Angela Merkel will (hopefully) see my ridiculous protest sign when she talks on the market place at our town ;-). Unfortunately four weeks ago her chief press officer rejected officially this problem in order to let sleeping dogs lie. Target-Credits are already three times higher than other German debt-liabilities. (214 Mrd. Euro vs. 645 Mrd. Euro)
Best of luck GFG.
If you can keep those neo nazis back a while - big help
Bund % new lows .....is that chart a secret
sheitzer
if they had seen this inb 2008 they would have bailed on the euro then
Tyler,
A good chart, but could be improved if it somehow showed the breakdown of the CB's involved.
After all, claims against The Netherlands, or even France, are not the same as claims against Greece.
Watson
Tyler,
where do you have the numbers from? I'm still waiting for the official release of the next numbers from the BuBa...
How is the German population supposed to "force" the Bundesbank to do anything? The euro project is driven by a pan European establishment elite who have far too much political capital invested to allow the taxpayers a say. There is no major party in Germany who are against the euro project. The electorate do not have a choice in the matter.
The Bundesbank is I N D E P E N D E N T
The Executive Board of the Bundesbank currently comprises six members. Half are nominated by the Federal Government and half by the Bundesrat, with all members being appointed by the President of the Federal Republic. The Bundesbank is independent of instructions from the Federal Government. In this respect, its status is comparable to that of the Federal Constitutional Court.
I repeat. How is the German population supposed to "force" the Bundesbank to do anything?
Yeah, GROWTH, innit?
And the Bundesbank want German Parliament to allow some itsy bitsy inflation (through higher wages) to help stimulate the eurozone..
http://www.ft.com/intl/cms/s/0/54fa4006-99ed-11e1-accb-00144feabdc0.html...
Germany lacks domestic Aggregate Demand - the German State has extracted everything for years with a 16 billion Euro surplus in Insurance Funds from over-taxing
Infinite prosperity is the mantra of the day on both sides of the pond and also in Japan jam-land.
So infinite denial>infinite print> infinite debt>infinite prosperity. Funny how funny money tickles some people in the right places as it trickles into their wallets to buy real goods! When does a virtual gang bang party crack the screen to become real thing? Just ask the Greeks!
will the German population say "genug" and force the Bundesbank
will the US population say "enough" and force the Federal Reserve....
which statement is the more implausible ?
EMU will not fall apart. This is just the symptom of a dying dollar-IMF. Europe is fine outside its zone and is well prepared for the gerat RESET with gold as the core. Get over the EU-doomsday already!
This article asks such an idiotic question I can hardly contain myself. The answer is so simple. The populace will not approve of any further payments by Germany into a bankrupt system, but the politicians and their ECB monkey bretheren will continue the charade nonetheless. There is nothing politicians do better than beat a dead horse.