GMO Does The Euro Bailout Math, Finds That Arithmetic Of "Sovereign Debt Crisis Is Daunting, But Not Insuperable"

Tyler Durden's picture

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Deadpool's picture

I have white paper in my bathroom too.

Unprepared's picture

That's some high quality capital you have there.

Eligible as collateral for swap loan at the Fed. Quick to the window.

Deadpool's picture

at least mine is two ply, the Euro and greenback ain't.

IQ 145's picture

When I check the numbers on debt, I get insuperable, and not daunting. This is good, because you don't have to look serious, and buckle down, and try harder, and all that shit; you're already fucked. So, you can laugh while you wander out into the traffic lanes, or giggle while you put the pistol barrel in your mouth and cock the hammer; you could take up wearing women's clothes; it doesn't matter what you do.

LawsofPhysics's picture

expected.  So is the forthcoming treasury rout.

SeverinSlade's picture

Banking on Keynesian economists to actually prevent economic collapse is like banking on Robotrader getting laid by anyone other than a hooker.

Pretty sure even hookers make him pay a little extra for their services.

Deadpool's picture

Hey! I already took a swipe at Robotooter today in the post on the 80's...pick on someone your own size.

SeverinSlade's picture

I heard Robotard went long NFLX the same time Whitney Tilson did.

Robo should be here any moment to tell us to go all-in long and to sell our PMs while they're trading up.

Note to self's picture

Normal growth, later in the decade?  That's a laugh!

Pool Shark's picture



I too laughed when I read that line.

"Normal" compared to what? The last 3+ decades of artificial booms fueled by profligate government/consumer spending and ZIRP? This time around, we're starting with virtually-unserviceable debt (both public and private).

Good luck trying to reproduce that "normal"...

Bwahaha WAGFDSMB's picture

They never factor in the hubbard curve.

merizobeach's picture

The link you provide at the beginning of your article is extremely informative:

Thank you very much for this.

The Axe's picture

I have seen this movie before Hank writes some shit on a napkin, market soars.

navy62802's picture

The European nations now have no incentive to control their spending. When they run up the debt-GDP, they'll just perform a "voluntary" debt write-down and everything will be hunky dory again. Money and debt mean less and less everyday.

UP Forester's picture

Funny, I don't see Iceland's current status explained in the paper....

Josh Randall's picture

uhhh, I was told there would be no Math...

SeverinSlade's picture

If you believe in using math to figure out whether or not the EFSF bailout plan will work then you're a conspiracy theorist.

I'm calling DHS right now because since I see something, I must say something.

Enjoy your FEMA camp.

navy62802's picture

Truth be told, math is unnecessary in today's economic environment. Only a ministry of truth and information.

Unprepared's picture

That's why we are starting with arithmetics. If that doesn't work either, we will devolve to Numerology to make the point.

Deadpool's picture

As long as the greatest trick ever pulled on mankind (aside from the Devil convincing everyone he doesn't exist) which is fiat money continues this farce will continue.

GotFood's picture

In the end I believe the American taxpayers will pay to bail out the Europeans.

s2man's picture

Are you saving that puppy for food?  You are a REAL survivalist.

SheepDog-One's picture

OH right, Im sure the Eurozone, like the FED central banksters, has learned their lesson this time and will now become super serially responsible and do things right from here on out.

Uh huh.

Bwahaha WAGFDSMB's picture

"a somewhat more normal global economic growth pattern resumes later this decade"

False assumptions lead to wrong conclusions.

NEOSERF's picture

Even if "normal" returns to the rest of the world, it ain't returning to the PIIGS.  Normal in the last 20 years was fueled by a tech bubble and then a housing bubble both from too easy money.  Assuming that we have learned our lesson and that 3-4% growth rate really would have been half that without the bubbles of easy money, then we should expect 1.5% growth on average going forward...this is not enough for the old Western economies to soak up labor and feed entitlements...expect more pain.

SeverinSlade's picture

The EU wants to ban rating agencies from being able to downgrade...

Pretty soon arithmatic will be banned as well.

s2man's picture

As will free speech on forums like this.

Ponzi Unit's picture

What the hell, spelling is on the way out.

WineSorbet's picture

an overdue deep dive into the maths of the European, and global, sovereign bail out.

Au contraire.  I believe ZH contributor Reggie M. has done the homework already!

peekcrackers's picture

the only growth out of the E U with be venereal warts from hookers

mynhair's picture

Ah, more shit on 'The New Normal'.

Just buy, dammit!  I need 1400 S&P!

glepo's picture

No sane investor believes this will stop with Greece. Portugal is in much the same trouble, despite the heroic austerity drive. The country’s total debt will top 360pc of GDP next year, and its current account deficit is stuck near 10pc of GDP. This mix is worse than in Greece. It is untenable.


The Sov debt is not even the problem (1tr euro enough till 20130.

The banks need another 200bn$ min.




Then the main problem is NPL in the private debt in Greece, Portugal, Ireland and Spain held, apart from local banks, mostly by French/German/UK/Spanish banks.


Print ECB print!

mynhair's picture

The only problem is your failure to appear at your local re-education camp as scheduled.

SeverinSlade's picture

Correct Comrade mynhair.

I have DHS on the phone right now. 

slewie the pi-rat's picture

this report was daunting...

...but not insuperable, BiCheZ!

Note to self's picture

Alright, I admit it.  I have no idea what insuperable means.  But its been such an exhausting day, I am too tired to google it.  Saving my strength to watch all the nightly news anchors sum up ALL of today's activities with the astronomical DOW index jump.  Then I can sleep . . . . not.


s2man's picture

double-click. right-click. choose Search Google for "insuperable"

(of a difficulty or obstacle) Impossible to overcome.

backseatdriver's picture

Mo money (injections) Mo problems (destruction)


Cheesy Bastard's picture

I know this is a European story, but any real extended conclusion must include Illinois, California, New York, New Jersey...

DormRoom's picture

wtf.. Keynes says to down debt during the years of prosperity.  Stop blaming him, instead focus on the inept way policy makers implement his theories.


It's like a doctor telling you that you can eat a hamburger a day, as long as you exercise.  You don't exercise. Becoming morbidly obese.  Then blame the doctor for telling you how you could eat humburgers every day.


Leaves Keynes alone, and focus on how the financial plutocracy is setting up the system to fail in an epic way--soon.

melanie's picture

Thousands clash with police in China (Huzhou), 8 dead after protest against higher taxes.

LawsofPhysics's picture

Hey, even the chinese may be waking up to the "here is a 10% raise, now we tax you 20% more" style of governing.

machineh's picture

'easier money at the ECB seems an easier solution to the question of resources.'

Even sober-sided GMO have turned into foam-at-the-mouth inflationists.

We're in trouble, BiTcheZ!

Vuvuzela's picture

From Pravda

All is a lie the game is rigged

Some people have started realizing that there are large financial groups that dominate the world. Forget the political intrigues, conflicts, revolutions and wars. It is not pure chance. Everything has been planned for a long time.

Some call it "conspiracy theories" or New World Order. Anyway, the key to understanding the current political and economic events is a restricted core of families who have accumulated more wealth and power.

We are speaking of 6, 8 or maybe 12 families who truly dominate the world. Know that it is a mystery difficult to unravel.

We will not be far from the truth by citing Goldman Sachs, Rockefellers, Loebs Kuh and Lehmans in New York, the Rothschilds of Paris and London, the Warburgs of Hamburg, Paris and Lazards Israel Moses Seifs Rome.

Many people have heard of the Bilderberg Group, Illuminati or the Trilateral Commission. But what are the names of the families who run the world and have control of states and international organizations like the UN, NATO or the IMF?

To try to answer this question, we can start with the easiest: inventory, the world's largest banks, and see who the shareholders are and who make the decisions.

The world's largest companies are now: Bank of America, JP Morgan, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley.

Let us now review who their shareholders are.

State Street Corporation, Vanguard Group, BlackRock, FMR (Fidelity), Paulson, JP Morgan, T. Rowe, Capital World Investors, AXA, Bank of NY, Mellon.

JP Morgan:

State Street Corp., Vanguard Group, FMR, BlackRock, T. Rowe, AXA, Capital World Investor, Capital Research Global Investor, Northern Trust Corp. and Bank of Mellon.

State Street Corporation, Vanguard Group, BlackRock, Paulson, FMR, Capital World Investor, JP Morgan, Northern Trust Corporation, Fairhome Capital Mgmt and Bank of NY Mellon.

Wells Fargo:
Berkshire Hathaway, FMR, State Street, Vanguard Group, Capital World Investors, BlackRock, Wellington Mgmt, AXA, T. Rowe and Davis Selected Advisers.


We can see that now there appears to be a nucleus present in all banks: State Street Corporation, Vanguard Group, BlackRock and FMR (Fidelity). To avoid repeating them, we will now call them the "big four"

Goldman Sachs:

"The big four," Wellington, Capital World Investors, AXA, Massachusetts Financial Service and T. Rowe.

Morgan Stanley:
"The big four," Mitsubishi UFJ, Franklin Resources, AXA, T. Rowe, Bank of NY Mellon e Jennison Associates. Rowe, Bank of NY Mellon and Jennison Associates.


We can just about always verify the names of major shareholders. To go further, we can now try to find out the shareholders of these companies and shareholders of major banks worldwide.

Bank of NY Mellon:
Davis Selected, Massachusetts Financial Services, Capital Research Global Investor, Dodge, Cox, Southeatern Asset Mgmt. and ... "The big four."

State Street Corporation (one of the "big four"):
Massachusetts Financial Services, Capital Research Global Investor, Barrow Hanley, GE, Putnam Investment and ... The "big four" (shareholders themselves!).

BlackRock (another of the "big four"):
PNC, Barclays e CIC.

Who is behind the PNC? FMR (Fidelity), BlackRock, State Street, etc.
And behind Barclays? BlackRock

And we could go on for hours, passing by tax havens in the Cayman Islands, Monaco or the legal domicile of Shell companies in Liechtenstein. A network where companies are always the same, but never a name of a family.

In short: the eight largest U.S. financial companies (JP Morgan, Wells Fargo, Bank of America, Citigroup, Goldman Sachs, U.S. Bancorp, Bank of New York Mellon and Morgan Stanley) are 100% controlled by ten shareholders and we have four companies always present in all decisions: BlackRock, State Street, Vanguard and Fidelity.

In addition, the Federal Reserve is comprised of 12 banks, represented by a board of seven people, which comprises representatives of the "big four," which in turn are present in all other entities.

In short, the Federal Reserve is controlled by four large private companies: BlackRock, State Street, Vanguard and Fidelity. These companies control U.S. monetary policy (and world) without any control or "democratic" choice. These companies launched and participated in the current worldwide economic crisis and managed to become even more enriched.

To finish, a look at some of the companies controlled by this "big four" group


Alcoa Inc.

Altria Group Inc.

American International Group Inc.

AT&T Inc.

Boeing Co.

Caterpillar Inc.

Coca-Cola Co.

DuPont & Co.

Exxon Mobil Corp.

General Electric Co.

General Motors Corporation

Hewlett-Packard Co.

Home Depot Inc.

Honeywell International Inc.

Intel Corp.

International Business Machines Corp

Johnson & Johnson

JP Morgan Chase & Co.

McDonald's Corp.

Merck & Co. Inc.

Microsoft Corp.

3M Co.

Pfizer Inc.

Procter & Gamble Co.

United Technologies Corp.

Verizon Communications Inc.

Wal-Mart Stores Inc.

Time Warner

Walt Disney


Rupert Murdoch's News Corporation.,

CBS Corporation

NBC Universal


The same "big four" control the vast majority of European companies counted on the stock exchange.

In addition, all these people run the large financial institutions, such as the IMF, the European Central Bank or the World Bank, and were "trained" and remain "employees" of the "big four" that formed them.

The names of the families that control the "big four", never appear.