The Global Moral Hazard Dawns: Merkel Says "It Must Be Prevented That Others Come Seeking A Haircut" As Ireland Cuts GDP Forecast

Tyler Durden's picture

Just about 48 hours after it was duly noted as the greatest threat to the Eurozone in the post bailout world, Germany finally grasps the enormity of what global moral hazard truly means. As we said before, the biggest risk facing Europe, and by that we mean undercapitlized French banks (all of them) obviously, is not Greece or what haircut is applied to the meaningless €100 billion in Greek debt when all the exclusions are accounted for. It is what happens when everyone else understands they now have a carte blanche to pull a Greece at will. And while until now we had some glimmer of hope there was a behind the scenes agreement for this glaringly obvious deterioration to not manifest itself, Merkel just opened her mouth and proved our worst fears wrong. As Reuters reports, "Chancellor Angela Merkel said on Friday it was important to prevent others from seeking debt reductions after European Union leaders struck a deal with private banks to accept a nominal 50 percent cut on their Greek government debt holdings. "In Europe it must be prevented that others come seeking a haircut," she said." Too late, Angie, far, far too late. Because, just as expected, here comes Ireland and literally a few hours ago, launched the first warning shot that will imminently lead to what will be demands to pari passu treatment with Greece. Next up: Portugal, Spain, and, of course, Italy, which however won't be faking its own economic slow down.

From Business Week:

Ireland's government may cut at least 1 percentage point off its 2012 economic forecast, as a global slowdown curbs the country's export-led recovery, according to two people familiar with the matter.


Finance Minister Michael Noonan said last month that the country may cut its gross domestic product forecast from 2.5 percent, published on April 29. The government details its medium-term budgetary outlook on Nov. 4 and may lower the forecast, according to the people who declined to be identified because the figures haven't been finalized.


“Work is under way on the medium-term fiscal statement,” said Eoin Dorgan, a spokesman for Noonan, declining to comment on the growth forecasts.


Slowing global economic growth and Europe's debt crisis is hampering the region's recovery. French President Nicolas Sarkozy said yesterday his country's economy will grow by about 1 percent next year, as he lowered an August forecast of 1.75 percent. In Ireland, Noonan has said the government may need more than the planned 3.6 billion euros ($5.1 billion) of budget savings, though “not an awful more,” to hit its 8.6 percent fiscal deficit target.


“Ireland is showing the characteristics which are required to put the economy back on the right track,” Brian Devine, an economist at NCB Stockbrokers in Dublin, said in a note on Oct. 26. “However, one must not forget that Ireland is recovering from the largest credit and housing bubble in OECD history.”

Indeed, Ireland is just the beginning in the global race to sequester what remaining global put funds remain, a race which will end with the ECB unleashing the printer, and, as Albert Edwards predited yesterday, with Germany making a decision whether or not to leave the Eurozone.

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YesWeKahn's picture

This is to help car makers.

goldm3mb3r's picture

Thank you - you just made me come in my pants.

NoClueSneaker's picture

OT ... you grabbed some FAZ ? Thx...

Ahmeexnal's picture

I was waiting for FAZ to hit 40.
I'm glad I didn't place that order as now I'm sure 35 is quite possible. However, with things moving as fast as they are, I might have to buy at the close today.

NoClueSneaker's picture

Yepp, thx ... Learned a lot from your hints.

Me dumb, but volume low and some of Berlusconis Banks didn't got a shot. ( Applause on the left  arm frantic ). 36 is good enough, ( me not qualified, but trying )....

Dick Darlington's picture

Easy, Bunga Bunga just promised, for realz, that he will raise the retirement age for some by 2 years between "now" and 2026.

knukles's picture

Fucking charade.  Discuss the relief of the symptom, too much debt, but not the cause, the disease, living way the fuck beyond ones' means.

See, nothing the fuck changes.
It's a grandstand of circle jerks.

Forget reading The Daily Platutude.
It's over, done, bad news, gone, beyoond redemption.

The fundamental raison d'etre for the EU has become ridicule.

PY-129-20's picture

Don't worry. Our finance minister just discovered 24 bn Euro by accident. We will pay for it. An unfortunate miscalculation over at Hypo Real. Accounting error - happens basically every day...what a clown show.,1518,794694,00.html

Blutorgel -.-

Piranhanoia's picture

they found the 40 billion bucks missing in Iraq.  GPS has a trace on Bin Hidin in the Indian Ocean. Nasa has found evidence of other odd footprints on the Moon, some on top of those of our honkeys, The swiss have found part of the 400 billion stolen from citizens of Deutschland from 33 to 45, in an old vault of course.  Amelia Earhardt is back from her vacation.  The Beatles 84th album goes Uranium selling 100 trillion copies.

I get my news from the Onion. At least they tell you its BS upfront.  Too bad it ain't.

PY-129-20's picture

LOL - now it is not only 24 bn - Spiegel just informed readers in an update that it is now 55 bn - out of nowhere. Just appeared.

This gets better and better.

Rick64's picture

Egemen Bagis, Turkey’s chief negotiator with the European Union, has criticized Germany, along with France, for seeking to sell military equipment to Greece while pressing the government in Athens to make drastic public spending cuts as a result of its dire financial crisis.

Ghordius's picture

Damn! I thought Greece would buy some frigates made in Italy, as usual!

Rick64's picture

Nope its France. Israel and the U.S. are in the game too.

According to information obtained by SPIEGEL, France wants to deliver two to four new frigates to the Greek navy and to allow the highly indebted nation to postpone payment of the €300 million ($412 million) purchase price per ship for the next five years.,1518,792189,00.html

Is Greece readying to spend millions and millions of dollars to buy advanced weaponry from Israel despite the economic crisis? According to reports coming from Tel Aviv and Washington, the answer is “Yes!”.  Executives of Israel’s defense industry are reportedly talking to Greece’s Armed Forces about a possible multimillion-dollar sale of advanced weaponry in Athens and Greek military officials talk in Tel Aviv about the purchase of unmanned aerial vehicles.

Daniel Cohn Bendit- president of European Greens/ European Free Alliance Summarizes it nicely. We're Hypocrites!

caconhma's picture

Italians are good dressers. For high defense officials Maseratis go very well with their 7-stars military uniforms.

philipat's picture

Ireland should have done an Iceland and told the Banks to fuck off. Instead it decided to bail out the Banks and shaft its own people. Having got the taste of that, if they can also shaft the German people as well, so much the better..................

Hansel's picture

So only Greece gets any debt relief?  That seems completely fair.

redpill's picture

In other news, the European Union (EU) is changing its name to the Federation of Undeserving Countries Killing the Economy of Deutschland (FUCKED).

gojam's picture

Fitting acronym redpill

Isn't it possums that play dead ?

 PIIGS play Possums (sounds like the title of a great new reality show)

Mike2756's picture

Greece is done, it's down to PIIS.

TheLooza's picture

dude, the germans played a role in getting their eurozone counterparts in the debt mess to begin with.  their hands are not clean. and i dont just mean the shit on their hands from all that ass fisting they do over there.

eurogold's picture

You are totally clueless.

DosZap's picture


To Whom are you refering?.

If me, you sir are the one without a clue.

eurogold's picture

Right you are! Now Italy, Spain, Portugal will be knocking at the door with their hands stretched out!

Germany must leave the EMU and tell everyone to go fuck themselves!

Ghordius's picture

What are you, a divorce lawyer?

knukles's picture

Nah, he's just been married for over an hour.

hunglow's picture

First soft, first that was served.

eatthebanksters's picture

kinda like Obummer's new housing plan which will only be available to people with underwater mortgages held by Fannie and Freddie...fuck everyone else, right?

LongBalls's picture

Just be patient. We will all have our opportunity at his program by the time he is done.

Boilermaker's picture

More like a buzz cut.

tmosley's picture

More like a decapitation.

GolfHatesMe's picture

Flowbee.  Do it yourself at home!

karzai_luver's picture

stole my line , SERF!

or is it get in line and haul out the clippers bitches.


3X long

powder wigs.


jcaz's picture

Oh yeah, and Ireland was supposed to be SAFE money- LOL!!

This is gonna be priceless- literally.

Chaffinch's picture

Nobody, but NOBODY, could have predicted that other cash-strapped countries would want similar
haircuts ; )

Make mine a Tony Curtis!

karzai_luver's picture

Will the Grecian Formula work and how many doses are needed!


Clyde Clyde .................

Deadpool's picture

save them Slovenia!

ziggy59's picture

Slovenia, Slovakia... What's the difference?

NoClueSneaker's picture

Simple ... from the day one was Slovenia paying in and Slovakia  getting checks from the €U...

In the meantime r both fucked.

Piranhanoia's picture

Makes a difference to them. Check out a map.

LawsofPhysics's picture

Good luck with that Merkel.  Give one participant a free ride while telling the others that they are stuck.  If there is anyone left toiling away to pay their mortgage, regardless of country, you now know exactly what a sucker you have been.  Crash the system already and let's find out exactly who's labor is of any value.  I promise compensation will find it's way back to people who are actually worth a shit.

B9K9's picture

Come on dude, you know the score just as well as Merkel and everyone else in position of authority. Not one person didn't see this coming; on the contrary, they all knew it was coming, but proceeded apace regardless.

Since CogDis is apparently taking a (brief) hiatus, I shall paraphrase something he was fond of quoting, to wit "we exchanged a heart attack for cancer". IOW, every day is another day to live. It doesn't matter about other falling dominoes, such as Ireland, et al lining for some 'Greek style treatment'.

It only matters that the system lives another day. The day market facts finally force acceptance is when the system actually dies. It can't possibly survive the degree of deflation explicitly built into such a mountain of debt. So it will fail.

With that in mind, all this day-day news flow & analysis is just BS. It's a binary problem for the PTB- die now or die tomorrow. So, why not live another day? The day it dies is when real competition, real value-add, real cost/benefit analysis begin once again. If you're a money-changer, why would you ever want to get down into the gladiator pit and fight for survival?

LawsofPhysics's picture

Living just fine.  Best line in any movie "get busy living or get busy dying".  Chance will always favor the prepared mind, period, and as you point out, it really is up to chance.  This is a trading site by the way, and when the market swings like this, you can bet your ass that it becomes important to those who make a living doing it.

ziggy59's picture

Quoted from Shawshank Redemption. Yes an excellent movie... Time tou view it again soon.

Cdad's picture

Good luck with that Merkel.  Give one participant a free ride while telling the others that they are stuck.

Exactly...just how are they going to do that?  Answer:  they are not.  Just more platitudes from an intellectually bankrupt group of politicians.

Cruel Aid's picture

Smoothing is applied to everything.

Pain will be avoided everywhere and for as long as possible in every segment of society.

It's human nature, and hope.


gwar5's picture

Couldn't have said it better. Good one.

gwar5's picture

Couldn't have said it better. Good one.