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Guest Post: The Trajectory Of Tragedy
From Mark J. Grant author of "Out of the Box and into Wall Street"
One More Greek Tragedy
“The end crowns all, and that old common arbitrator, Time, will one day end it.”
-William Shakespeare, Troilus and Cressida
We are approaching an endgame, March 20 will mark the spot on your calendar, and while it is certainly not “the” endgame; it is one of the continuum. During the next twenty-three days we are going to get some answers to a number of questions that have been unanswered and a number of verdicts that will set the stage for the performance. In the end I suspect there is going to be a decision made by Germany whether to fund the Greek bond payment independently of everything else or just to let them go and destroy the grand myth. Germany will probably end up playing chicken with itself in an exceedingly bizarre pact with the Devil. In the first instance there is more and more evidence that the PSI will not go as hoped as many institutional investors do not take the bait and are not willing to roll-over for the good of Greece and Europe. Each time I hear some European politician speak about the obligations of money managers I am reminded that these people live far off the beaten path of reality. Somehow the “responsibility to shareholders,” so prevalent in other conversations, finds itself left out in the woodshed when speaking about the Greek bailout. The boys speak from both sides of their mouths which is a common trick amongst these rascals and one that I have never attempted though they seem to have it down pat. Forbearance and fealty depend upon the subject at hand and Greece demands one covenant while corporate jurisprudence demands another. The often intoned phrase for bondholders, that this is the one and only time we will get spanked, rings with all of the truth of the Trojans proclaiming that they “Come in peace.” A horse tale history has taught us.
Aside from everything else the trick pony may well turn on a PSI deal that does not get accomplished and no time left to fix it. Consider the implications of a failed deal where Greece is over one hundred billion short and no time available to head back to all of the Parliaments to try to increase the bailout one more time. Realization may well turn to European panic and wails of desperation heard long into the night. I have discussed the “Collective Action Clause” and the CDS trigger or not but what if the transaction just does not get done as 26% or more of the bond holders choose not to participate for whatever reasons. This scenario is looking increasingly likely and should be seriously contemplated now.
April 22 and “Vive La Difference”
Here we have the first French election with May 6 behind it for the run-off if needed. The man who would be Napoleon will end up swinging from the gates at the Bastille it appears. Sarkozy is not Bonaparte and the present ruler is about to be forced from the palace. To put it in perspective, what is about to occur is exactly like the American elections if the majority and the Presidency went to the Republicans; a total reversal in social policy and direction. There may be some wrong or right to it but I do not speak to those issues this morning but rather a recognition that reversal is coming. Besides the fallout for the French banks, evil-doers in Hollande’s assessment, the clawing and scratching between Germany and France is about to get ferocious. This will then have a marked impact on the direction of the European Union with Germany wanting to go right as the French turn to the left. I continue to think that one of the best shorts is France currently; bonds, equities, brie futures, the Chanel #5 June contracts, Victor Hugo memorabilia, Marie Antoinette tarts, room nights at the George V and Hermes scarves July contracts.
The German Dilemma
With an economy of just $3.2Tn versus the United States $14.3Tn Germany is trying to prop up a Eurozone that is more than one trillion dollars bigger than America. They just do not have the resources for the task they are undertaking and I predict serious consequences, eventually, from their efforts. Germany is “best of class” and will be the last to go but they cannot evade the European recession in the end and I think it is only a matter of time and unfortunate decisions before the austerity demands made on so many will wind their way back home to those who made the demands. They used a timeline that was much too short for the job at hand and payment will eventually be forced upon them. They obviously get the joke where Eurobonds and other ploys of this nature average the economies of Europe and the standards of living over some period of time so that Germany, in the end, will suffer most as they have the furthest to fall. They have approached the G-20, China, the emerging market countries and all polite responses to the side; the results have been about zip. The Germans are running out of both time and money and Franz is squirming in the beer hall.
One more Lowenbrau please!
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It's been delayed.....that's the real tragedy.
Death by a thousand cuts....not a good way to go.
"Trajectory of Tragedy" ... great title. It feels like this HUGE game of "wait and see", but the general direction of the outcome is clear to anyone with eyes to see.
Solution to this comedy of errors: Greece Default.
Shhhhhhh don't call it that!
"With an economy of just $3.2Tn versus the United States $14.3Tn..."
And precisely how much of the indicated American "$14.3Tn" economy is, shall we say, directly Government and Fed "inspired ?"
It won't be a default, it will be a Kinetic Monetary Event.
And we can send Ben in to drop Money bombs from his helocopter.
'With an economy of just $3.2Tn versus the United States $14.3Tn Germany is trying to prop up a Eurozone that is more than one trillion dollars bigger than America.'
Absurd. Totally out of context and revealing for the rest of the piece.
With the largest corporations in the country hoarding cash in a zero rate environment, losing to inflation out of fear of Washington DC doesn't really jive with corporate fascism either. But I don't want to get in the way of a great tale, like the German one referenced here.
What corporation has a sale value greater than the total equities issued against that value?
Very good point. But there is nothing preventing a corporation from playing both ends, is there? IE, increasing their political influence (Fascism) and keeping cash hoards in case it doesn't work. Sounds sane to me!
No problem the other way around though, the fraudulent Euro purchasing power had no problems propping up Germany. The socialist utopia being backed by imaginary prosperity.
Sorry...
Believe it when I see it. Been waiting a very long time.
the german people got fucked really hard, when germany joined the EU the people were promised they wouldnt have to bail anyone out , but that was clearlya a big lie because as long as the eu is merely united monetarily but not fiscally someone's going to get burned
when germany joined the EU
Germany joined the EU in 1957. The Euro was introduced 1999. The Lisbon Treaty 2009 which prohibits bailouts in Art 123 was introduced
Article 1231. Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.
Article 1251. The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.
2. The Council, on a proposal from the Commission and after consulting the European Parliament, may, as required, specify definitions for the application of the prohibitions referred to in Articles 123 and 124 and in this Article.
The German People did NOT vote on these matters.....EVER
sandmann, the German People did also not vote on the Geneva Convention
come on, don't be a Nigel Farage, we all elect representatives to do our voting.
the only People that vote on issues are the Swiss - be frank and ask for direct democracy, then
But German manufacturers and their employees did sell a lot of goods to countries who otherise would not have been able to buy them. Uniting the EU fiscally might sound like a good argument, but the reality is that it will not be even slightly democratic and the resultant chaos will make Greece look peaceful.
German Manufacturers and exporters know that their markets in the southern Euro states are gone whatever happens. They are looking East, especialy to Russia and are winning new markets there. Germany will look to the east politicaly once the EU finaly crumbles and this is what scares the French.
This forced EMU experiment has only 2 outcomes:
1. leaders will openly say "F*ck You voters!" and keep on pushing untill everything is fubar
2. Leaders will wake up and see that this is not a viable option at this time and the differences between EU countries are too big atm
My guess for 2012 is option 1, then in 2013 number 2 kicks in... at least, i hope it does...
It seems that EU leaders more and more don't answer and aren't elected by any voters. They're Honey Badgers - they don't give a fuck.
"During the next twenty-three days we are going to get some answers to a number of questions that have been unanswered.."
Greece is bankrupt, was bankrupt, shall be bankrupt.
The clown show hasn't shed light on anything, or changed anything. just delayed the answer we all know is coming outside of that delusional Eurocrat-bwanker bubble.
Why didn't they hold at least one of the 283 useless meetings in Iceland?
http://swissmatters.files.wordpress.com/2010/05/picture-1.png - everyon's bankrupt... at the same time.
I find this part to be questionable: what is about to occur is exactly like the American elections if the majority and the Presidency went to the Republicans; a total reversal in social policy and direction.
If the majority and the Presidency were to go the Republicans, it would be by design. I assume it's like that in other western "democracies" as well.
We'll get it, at some point... the removal of the trappings of elections that matters. It may happen through an election, it may just be the codification of something like the "super-committee".
"80%-85% chance DOW hits 20,715, or even 33,346 in a 3rd wave"
http://elliottwave.info
For the waveristas: http://www.sharelynx.com/chartstemp/free/GoldeWave.php
Hey Uncle Warren - tell us what the price of gold, oil, a house, and a loaf of bread will be if the Dow gets to those values. Announcing what you believe the Dow will or won't go to is nothing more than hand waving absent a macro context.
The beer will pour
Must be something more
Somehow....
...Here we have the first French election with May 6 behind it for the run-off if needed. The man who would be Napoleon will end up swinging from the gates at the Bastille it appears. Sarkozy is not Bonaparte and the present ruler is about to be forced from the palace....
Sarko more like Napoleon III and he lost at Sedan to Bismarck. I think Sarko lost to Merkel over Greece and no Eurobonding.
Both Sarko and Napoleon III had beautiful wives; that's some consolation.
Having said that, all this Euromoaning is pointless. IF Eurozone falls all first world falls, including CIty and WS. Its goodbye both Euro and USD.
Your thinking is black and white and prevents action. There is far more sublety in life. "Goodbye both Euro and USD" is not actionable, nor instantaneous or, in time, assured. Don't get too far ahead of the curve, avoid the bleeding edge.
..to borrow from WB....and in the end "The Goldmuns" shall sack Europe.....perhaps this is their ultimate revenge on Germany?
Germany's two key industries, autos and chemicals, are both going to be severely impacted by higher oil prices, leaving Germany in an even weaker position to bail out this Titanic.....as the ship listed, the Garmans formed a bucket line and bailed frantically, but to no avail....the Brits assisted by rearranging deck chairs...
Misses the point, like 99% of all articles about the EU crisis.
What's going on in Europe is NOT a battle between nations. It's a battle between the international ruling class running the EU and the peoples of Europe. There are no nations in Europe (one could cut the "in Europe" part of that sentence and it would still be true).
Talk about "Germany versus Greece" et al is propaganda, intended to get the peoples of Europe fighting with one another (the Greeks fighting with the Germans, et al) rather than fighting against the international ruling class which is fucking all of them. Germany isn't bailing out Greece. German taxpayers are bailing out the creditors of the Greek government, which happen to be the major European banks. And Greek taxpayers are joining in the fun. All transfers of money in this game, despite talk about profligate Mediterraneans versus thrifty Deutsches Volk, is from the people, via their governments, to the banks. As with the American bailouts. As ZH aptly pointed out the other day, Greece is NOTHING but a conduit for the funds bailing out the banks. The German people are getting fucked, the Greek people are getting fucked, their governments all work for the banks that this scam is benefiting.
In light of this, talk of German threats to leave the EMU is nonsensical. Merkel has to act a certain way to keep the Germans under the illusion that she represents them: same with all the other European national leaders.
Not real. The EU will not break up. I'd bet everything I own on that. The governments all working for the same banks will bring the EU to the brink of collapse (problem), and there will be a (fake) battle between those who say "let it go" and those who want reforms to save it (reaction), and ultimately a miraculous reform will pass creating a more thoroughly federalized EU (solution), which was the goal of all parties concerned from the beginning. You're watching Marxism in action, the Hegelian dialectic.
Greeks and Germans, all over the world, unite!
For what???
The German's got to sold their souls to the architect of the Euro.
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