Gross On The Futility Of The European Deus Ex Machina: "A French/German Guillotine Hangs Over The Markets"

Tyler Durden's picture

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jcaz's picture

Fine, go ahead and default already-  that's a function and fault of a nil-interest credit market.....

Harlequin001's picture

A default hammers a nail in the coffin of the one-world-central-controlled-bilderberg-conspiracy-theorists...

No one has as yet explained how a one world government intends to control the rioting masses.

or how they ever did.

falak pema's picture

But it increases the risks of regional wars and nuclear conflict. The world will shrink financially, economically; it will change with more power going to South & East, more productive and with more human growth potential; as poor and young. It will mean more wars as the North and West won't give up power simply because they are drowning in debt. It is the sign of the times and the scenario when "clash of civilizations" will get much worse, not much better; much to the dismay of the new generation who have no political power, will have lost all economic power, wil have only solution in violent revolution in West. So clash of civilizations will be compounded by clash of social classes and generation gap in the West. ...Very complicated, anarchy begetting scheme for West, in power cum social decadence spiral. 

You can already see that the Euro gridlock will create a lot of rancour along north-south continental divide as the Euro implodes;not if. Same is true for  Usa and Japan. We will move backwards and creating more wars outside our own frontiers may backfire even more; "may" is an understatement IMHO.


Harlequin001's picture

True, but I have long argued that there is no plot to rule the world by some supposed elitist Bilderberg group because the common man makes it ungovernable.

What you say may be true, and I believe it is but it does not change my view that this whole mess is the responsibility of governments that pander to the masses demanding welfare, and that governments support banks because they need to, and not because they have to. Banks don't rule the world - they influence it but they don't rule it. Ultimately the common man does, and when he decides to riot the game is over.

Still ain't seeing no  centrally run conspiracy Bilderberg plot to run the world...

I see anarchy, unfortunately...

HD's picture

What? "Let them eat cake" may not work out for the money printers? I'm shocked. SHOCKED!

Undecided's picture

Figures, I don't see him spending less then ten years. If you can plan something along these lines there is no such thing as insanity! i guess being part of certain groups helps your case Immensely. For shame!

onceinalifetime's picture

I think that Norway government didn't want him to speak in the court.

Undecided's picture

They could have made it closed doors to the media then.  Now he will sit in a cozy little mental institution.  This is one of the few times i advocate the death penalty.

Schmuck Raker's picture

F**k Bill Gross. F**k Hank Paulson.

Just sayin'...

Sunset chaser's picture

It looks like the end of the line for the "get out of debt by going further into debt" mantra.

cossack55's picture

I would not bet on that.  Ink is cheap.

Antifederalist's picture

Bill Gross. STFU

You are the problem. Not the solution .

Carlyle Groupie's picture

What has become obvious in the last few years is that debt-driven growth is a flawed business model when financial markets and society no longer have an appetite for it.

Antifederalist's picture

Yep. Game the system, then morph into "I told you so.". Sorry Bill no dice

Hedgetard55's picture

Worse is the implication that the system is ok as long as there is appetite for new debt - i.e. as long as the Ponzi is growing. Gross is a putz.

WarriorClass's picture

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, ... when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their DUTY, to throw off such Government, and to provide new Guards for their future security.

Ricky Bobby's picture

I am most sure those words are now classified as verboten. You are now in the big DATABASE.

jabaykhan's picture

he already bought all these EM bonds. now your turn. he would sell it 2 u

fonzanoon's picture

Okay everybody back to work.

MFL8240's picture

This piece is interesting as recently Gross loaded up on US treasuries so none of this global bullsht passes the smell test.

monopoly's picture

Tick, tick, tick.......

Smiddywesson's picture

...almost necessarily involves several years of recessionary growth and deflationary wage pressures on labor markets in the offending countries." will be years before Euroland and developed nations in total can constructively escape from their straitjacket of debt. 

... Global growth will likely remain stunted, interest rates artificially low and investors continually disenchanted with returns that fail to match expectations.

This assumes the whole shebang won't implode.  That's a very big assumption given the complexity of the system, the size of the derivatives market, and a 1000 years of history that teach us that war settles these matters

Most of the global debt he refers to can't ever be paid back and it's childish to even consider that it will.  Even if that were not so, don't expect a rebound in jobs or incomes or housing for a very long time.

Miss Expectations's picture

I can't stand some new words that have crept into our vocabulary...Euroland, Chicagoland, Homeland...where did they come from?

chubbar's picture

Speaking of broken marriages, we wonder just how many CDS Gross is long parent risk-soaring Allianz?

Of course the follow-up question should be "what analysis have you done that leads you to believe the counter-parties of your CDS will actually pay off when the crash occurs?"

hollowbody's picture

Far be it for me to attmept any kind of defence of Keynes here, but a few things are deserving of thought before everyone blindly accepts the Huns in Germany as paragons of all monetary wisdom and virtue. Keynes argued consistently that 'corrective' measures were the responsibility of BOTH deficit and SURPLUS countries - although he got his way to an extent with the IMF's 'scarce currency rule', Harry Dexter White and his heirs did their best to neutralize the rest of this reasoning. The EU similarly placed obligations on surplus countries within the ER mechanism, legal rules which Europe's new masters chose to ignore, in clear breach of their treaty obligations, in just the same way as they have done with their bloated (deficit) spending, which to within a few pips has mirrored that of arch villain Greece throughout almost all of the last decade prior to the immediate Lehman fallout (check the charts). In a parallel to the US's and the UK's own bloated spending and currency manipulation, Germany has used the Euro almost exclusively for its own ends, its banks as recklessly as anyone else's, and I for one view the crazy sovereign rates now being paid by both the periphery and increasingly 'the core', as simply the fruit of what they have sown. They are responsible, in all senses of the meaning of that word, and in truth, the markets will eventually have no option but to price this in accordingly........

narapoiddyslexia's picture

"the markets will eventually have no option but to price this in accordingly........"

But the whole structure relies on markets not working. 

What may well happen is that "Euroland" governments will soon have no option but to prevent markets from pricing this in accordingly.

Just like Ben does.

Stuck on Zero's picture

Everyone forgets that the top 1% conrols 40% of the world's wealth.  That 0.1% also controls all the legislatures, Congresses, central banks, media, and printing presses.  They can continue the system of fiat currencies, debt, and government forever.  The only thing they cannot supply is the labor that makes everything work.

Long-John-Silver's picture

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bank guy in Brussels's picture

There may be a new Swiss - German currency shortly, maybe not fully 'freegold' or 'good as gold', but still impressive.

As said above, « Europe will never submit to a federalist union controlled by Germany.»

Bill Gross is right re « The ultimate vote of the working men and women in these countries. »

Those crazy things Germany is suggesting, about other EU nations being governed by commissars from Brussels or Berlin, would never last.

So I am increasingly thinking that it is possible that Germany is indeed secretly planning to leave the euro first, and create a super-strong Swiss - German currency which would soon be among the world's favourites.

The Swiss franc is already pegged to the euro, and if Germany and perhaps some other northern countries leave the euro, the Swiss would obviously shift their peg to the new German money.

This is an explanation for why Chancellor Angela Merkel and the German leadership are acting so strangely ... so obstructionist to possible solutions to the euro-zone ordeal ... saying things that rather makes things worse ... pretending to support ridiculous pipe dream plans for 'supervising' Europe.

But Germany getting ready to leave the euro, explains the German 'No' to most solution measures, why Germany is suggesting ridiculous solutions ... why Germany is exacerbating the crisis ... which Germany will shortly solve.

It all makes sense. It is cheaper for Germany to re-capitalise its own banks (which would collapse from the debt they hold in euros on the other countries), than it is for Germany to promise to pay for all of Europe to infinity.

And this way the southern countries, they could keep the euro, the European central bank could inflate for them, they could print like Ben Bernanke, they could have cheaper currency to attract tourists and export, et cetera.

In the UK Telegraph, Ambrose Evans-Pritchard has been suggesting this for quite a while, Germany leaving the euro as the best solution for everybody, leaving the southern countries with a currency deflation option to rescue themselves.

It is of course unusual for Germany to be so bold in this way ... but maybe it is time for Germany to be bold again.

Am not sure I would predict to this happen ... but this does seem to be the best explanation of why a very smart German leadership would be acting like it has been acting.

In a few days Germany will lead a meeting which will establish procedures by which countries could exit using the euro ... theoretically they have Greece in mind, but maybe indeed, Germany is secretly preparing its own exit.


Treason Season's picture

If the scenario plays out then the forex markets will begin pricing this in. What will Germans holding Euros do? What wil anyone do holding the currency do once the handwriting is on the wall? Hmmm, be continued.

vote_libertarian_party's picture

Sooooooo we can safely say that PIMCO is short stocks???


I just saw El Arian saying things are pretty messed.

dirtbagger's picture

Gross must have a large short position in sovereign and US bonds.  Still PIMPcoing his book.

earleflorida's picture

"so,... the puppet master's strings are `sewing signs of fraying, and unraveling - as threaded fatigue wears thin,... thus the anti-climatic n`th redux - 'the gross/fink condition audition' finale of a 'fbr/allianz bond',... now in it's final stage of 'carpel-tunnel-paralysis',  without even a shoeless, 'dutch-boot shoestring' for hope - damn,... this full recovery tied only in a gordian knot about the siamese neck of a bonifide two-headed shylock"

automato's picture

I used to play poker in my youth but I 'retired' from the game after being thoroughly cheated by 2 cons speaking a foreign language to each other during the game. The moral of course is biblical in that you will never have trust among parties that exist at the 'Tower of Babel'. The EU must adopt a 'National Language' before any real trust will begin to emerge. It is elemental. You will always distrust someone speaking when you must rely on a third party to translate. Interpreters will invariably alter the text of the translation for fear of upsetting or for too many different motives to mention. They're screwed for the foreseeable future.

BlakeFelix's picture

Meh game the system if you can.  Not like Bill Gross who didn't play the game would get any headline time, or the game needed him playing to continue.  He'd be poor in a collapsing system, instead of rich in a collapsing system.  Using the system to get rich and then using your resulting fame to bitch about how stupid and broken the system is looks hypocritical, but it's still perhaps the best of bad alternatives.

Miles Kendig's picture

Bill Gross and Chauncey Gardiner both appreciate the situation...

Rather than attempting to avoid the inevatible in a race to the bottom [of the septic tank] it seems the first to embrace a full and complete clearing event will be the first to emerge from the winter of our own making.

Now all that's needed is a comptetent barber.  There is door number 1

Door number 2

And, behind the washer

Door number 3

Time to make a deal with Santa

Cheers Bill