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EURUSD Pops On Merkel Statement She Is Ready To Pay More Capital Into ESM To "Send Message To Markets"

Tyler Durden's picture


With the EURUSD below 1.27, it was time for today's Europe bailout, which just came courtesy of Frau Merkel, who in a press conference with Monti stated the following:

  • Merkel says Germany willing to pay more capital into ESM at the start in order to give message to markets
  • Merkel says if soldairy is necessary we are ready to react immediately
  • Merksel says there is still much money in the European structure and cohesion funds

Of course, none of this is news, and merely means that Germany is delighted to prepay in order to subjugate Europe faster. We expect the kneejerk reaction in the EURUSD to be promptly reversed. But for now some of the weaker shorts have been burned.

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Wed, 01/11/2012 - 08:59 | 2053909 GeneMarchbanks
GeneMarchbanks's picture

Half-life? Probably minutes....

Wed, 01/11/2012 - 09:27 | 2053960 Snidley Whipsnae
Snidley Whipsnae's picture

Gene... Something just popped gold to $1641... Anyone's guess what...


Wed, 01/11/2012 - 09:01 | 2053911 Irish66
Irish66's picture

Word for German Mafia?

Wed, 01/11/2012 - 09:56 | 2054054 Cast Iron Skillet
Cast Iron Skillet's picture

= Mafia

Wed, 01/11/2012 - 09:03 | 2053913 misterc
misterc's picture

So what will this former communist spy Merkel do?
Raise the VAT from 19% to 22% in order to fulfill the debt brake rule?
This will make the Michels and Jürgens sing joyfully in the midst of a starting recession. 

Wed, 01/11/2012 - 09:05 | 2053917 lizzy36
lizzy36's picture

Well Germans portion of the total is EUR40B (total paid in capital for ESM is EUR80B) which they were going to pay in EUR4B installements over a 5 year period.

It was first reported at the last summit (december 19, 2011) that German MAY pay in more up front. What does that mean? They going to put EUR10B in and then pay the reminder of 5 years?

And really who cares how quickly Germany pays in their portion? Basically there is no increase in paid in capital and last i checked the 2,3, and 4 contributor nations are still likely to also become those in "need of funds" nations.

Btfd:Germany going to pay in more quickly!

Wed, 01/11/2012 - 09:46 | 2054021 jcaz
jcaz's picture

Yep. more verbage, misdirection-  stupid to pump the market at this point-  2,3, and 4 will just sit back on their heels with some delusion that Germany will save the day....

Wed, 01/11/2012 - 09:07 | 2053919 vegas
vegas's picture

Some day somebody is going to write an anthology of all the bullshit press conferences [with timelines] that expose the hubris, stupidity, and complete incompetence of these asshats as they attempt to deal with the disintegration of the Euro.

Maybe then the public will wake up and realize what dupes they have been for electing them in the first place. I'm not hopeful.



Wed, 01/11/2012 - 09:06 | 2053920 OttoMBMP
OttoMBMP's picture

The Brussels overlords incl Merkozy are is delighted to make Germans prepay in order to subjugate Europe faster.

(Fixed it for you, Tyler.)

Wed, 01/11/2012 - 09:07 | 2053923 Hedgetard55
Hedgetard55's picture

There aren't enough Euros to fill this rat hole.

Wed, 01/11/2012 - 09:10 | 2053927 Quintus
Quintus's picture

This is lamest excuse for a EUR rally in some time.  Who cares how much Germany puts in at the start?  Or the end?  Or the middle?   What matters is how much they are willing to put in overall, and that is not even up for negotiation.  

The only message this sends to the market is that Merkel is desperate to say something that sounds a bit like Germany going soft on the issue of paying for perpetual Euro bailouts and this is the best she can come up with.



Wed, 01/11/2012 - 09:11 | 2053930 Everybodys All ...
Everybodys All American's picture

The markets are so thinly traded that the least little bit of news moves the whole world right now.

Wed, 01/11/2012 - 09:09 | 2053928 Snidley Whipsnae
Snidley Whipsnae's picture

Merkozy = blah, blah, blah, blee, blee, blee...

These two clowns are 'always ready to do something'... but seldom actually do anything and when they do it's for the benefit of failing soverigns/bankers.

Which has accomplished nothing for the 99% of workers/citizens of EU.

Want to see how bad life has become for the average Greek?


Wed, 01/11/2012 - 09:12 | 2053931 Mae Kadoodie
Mae Kadoodie's picture

Sarkozy, what are you getting your girlfriend for Valentines day?

Wed, 01/11/2012 - 09:12 | 2053933 agent default
agent default's picture

In the end, there will be widespread Euroscepticism across all affected countries and the EU/Euro will go the way of the Dodo.  The only question is how much damage these criminal scumbags will cause before the inevitable demise of this monstrous project called the EU.  The Eurozone periphery is already beginning to flare up politically, the left is on the rise and it is only a matter of time before  there is real social unrest that will take governments down.  With torches and pitchforks.

Wed, 01/11/2012 - 09:16 | 2053938 Cassandra Syndrome
Cassandra Syndrome's picture

Remember when it used to be about predicting economic indicators, analysing the fundamentals and technicals? Now you just merely have to be a Nostradamus like prophet and predict spontaneous Merkozy press releases, FT rumours and mind boggling Central Bankster's impulsive decisions.

How wonderful..... 

Wed, 01/11/2012 - 09:26 | 2053955 youngman
youngman's picture

I agree..and I quit....bought gold and silver....period

Wed, 01/11/2012 - 09:17 | 2053940 Ropingdown
Ropingdown's picture

Merkel's entire strategy, and I think it's the sensible one, is to sound supportive and pro-Euro right up to the instant that the peripherals become unsustainable.  "It wasn't Germany's fault.  We did everything reasonable to save the Euro."  And she will save the Euro, the NordEuro.  She's consistent in this approach.   Germany's not going to pay for the periphery endlessly when it has to raise capital and compete with China, India, and the US manufacturers.  Several of the peripherals have tried to expand their share of foreign markets as competitors to Germany.  I doubt Merkel's going to subsidize that while also increasing Germany's capital cost.

Wed, 01/11/2012 - 09:52 | 2054037 ebworthen
ebworthen's picture

I can't imagine the German people supporting Merkel much longer or voting to subsidize the periphery (Southern Europe).

Wed, 01/11/2012 - 12:24 | 2054755 falak pema
falak pema's picture

if they drop Italy and Spain into the market meltdown, let alone Greece and Portugal, the cumulative banking exposure for Nord Euro + France + UK = 3T Euro. Even assuming a hair cut of 50% overall, the world economies cannot take such a shock in private banking of Eurozone, as the contagion to US banks + Japan will be horrendous. This is real asset money wipe out not synthetic virtual assets. The cumulative debt levels in all three first world pillars makes this unsustainable. And, we don't have the growth scenarios to allow mild inflation + growth to write down debt mountain in sustainable fashion. Its a cliff hanger and the chord will snap or else somebody will invent the perpetual motion machine working on free energy without green house emission. Take your pick.

Wed, 01/11/2012 - 09:20 | 2053948 fonzannoon
fonzannoon's picture

The NordEuro......I completely disagree with that. Thats ridiculous. Everyone knows its going to be the EuroNord. Nord is such a funny looking word. Nord.

Wed, 01/11/2012 - 09:59 | 2054058 Cast Iron Skillet
Cast Iron Skillet's picture

in Germany they call it the "Nordo". The southern Euro would be the "Südo"

Wed, 01/11/2012 - 09:26 | 2053958 paul_Liu
paul_Liu's picture

Tyler, how can you be sure about the reversel?

Now it is almost sub 1.27

Wed, 01/11/2012 - 09:29 | 2053965 Snidley Whipsnae
Snidley Whipsnae's picture

PL... and meanwhile gold popped to $1641... I doubt this is what Merkel had in mind.


Wed, 01/11/2012 - 09:31 | 2053969 Tyler Durden
Tyler Durden's picture

A kneejerk reaction to a pop higher means it goes lower right? As in sub 1.27

Wed, 01/11/2012 - 09:34 | 2053974 Quinvarius
Quinvarius's picture

The Euro is going to go to where the central bankers want to peg it.  It amazes me that people try to read anything into worthless paper currency moves.  The low end of the peg has been around 1.25 since 2004.  The high end around 1.50.  This is no time to be looking for crumbs.  They are going to take it straight back up to 1.50 after they tell Soros to cover his Euro shorts.

Wed, 01/11/2012 - 09:36 | 2053977 firstdivision
firstdivision's picture

So when do the protests begin in Germany?

Wed, 01/11/2012 - 11:00 | 2054024 GeneMarchbanks
GeneMarchbanks's picture

Never. Germans aren't allowed to be vocal or somewhat upset. Never mind violent. Ever.

Wed, 01/11/2012 - 13:10 | 2054917 Ropingdown
Ropingdown's picture

I travelled very often through Germany in the 80's and 90's.  I was in München waiting for a sleeping-car train to pull into the station.  70 or 80 cheerful people on the platform.  The train pulled SANS sleeping cars.  In one second the 70 or 80 people turned into a scary group of snarling monsters.  Sure, Germans can't be upset. Not.  Just don't be nearby when it happens.

Wed, 01/11/2012 - 09:37 | 2053980 bombimbom
bombimbom's picture

ooooh ze deutsche volk subjugating europe ooooh LOL

sometimes it looks like ZH is on a campaign to scaremonger and create division and mistrust inside europe. but after pondering I think it's just words out of the love for EU, euro, Europe that unites all of us, ZH being passionately in the frontline.

Wed, 01/11/2012 - 09:38 | 2053986 dcb
dcb's picture

man these leaders do nothing more than react as slaves to the market. which of course means slaves to bankers

Wed, 01/11/2012 - 09:47 | 2054027 shushup
shushup's picture

So now it's Montkel instead of Merkosy?

Wed, 01/11/2012 - 09:55 | 2054049 ebworthen
ebworthen's picture

Parity!  Euro/Dollar parity!

I want my next visit to Oktoberfest to be CHEAPER!


Wed, 01/11/2012 - 10:07 | 2054086 Sandmann
Sandmann's picture

Did you also note that Die Welt reported Schauble trying to circumvent the Constitutional Amendment which restricts Deficits and has not yet even come into force ? Yet this is from a Berlin regime determined that the EuroZone will have a binding constraint of Deficits . It looks like 2002 all over again with Schroeder and Chirac breaching the Stability Pact. It goes around in circles

Wed, 01/11/2012 - 10:54 | 2054298 theprofromdover
theprofromdover's picture

It is inconceivable that Merkel would believe that she can attach any strings to the money Germany hands over. Unless she thinks 20 years of unwarranted wholesale resentment from the rest of Europe is just a minor inconvenience.

She must know that no nation (nation, not government) will stand for the handcuffs and the asset sales that would be necessary to meet new long term debt targets -especially the Frogs. So either this is a charade to maintain an appearance of good-neighbour, or she has got confused.

Wed, 01/11/2012 - 13:14 | 2054938 Ropingdown
Ropingdown's picture

Completely a charade to play good neighbor, doing just enough to make ambiguous who is to blame for the break up.  There is no other choice.  Germany can't afford an obvious brash play, but they also can't afford to pay for five or six nations' problems.

Wed, 01/11/2012 - 13:08 | 2054915 Victor Berry
Victor Berry's picture

Tyler ... Put on your central banker's hat and predict whether or not the ECB/Draghi will cut interest rates again.  The EURUSD futures seem to indicate a downward bias which means the market is pricing in a rate cut, yes/no?  If I were Draghi and it's now every central bank/country for himself, then I would cut rates drastically to match those of the Fed/Bernanke.  What better (or expedient) way is there to increase your exports and avoid recession than to devalue your currency?  If food/fuel costs runaway and the proles protest too strongly, then impose price controls.

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