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Hold On Tight: European Bond Issuance In January Is About To Get Very Bumpy
While someone continues to guietly push the EUR offer ever higher in the quiet holiday session, the reality is that with only 5 days to go in 2011, the holiday for Europe is ending, and "the pain"TM it about to be unleashed. All 740 billion worth of it. Because while Japan is monetizing its deficit (and having to issue more debt than it collects in taxes), and America is hot on its heels (as a reminder the US also issues roughly one dollar of debt for each dollar in taxes collected), Europe is still unsure whether it will monetize explicitly (that said, we did clear up that little bit of confusion over implicit monetization, with the ECB's balance sheet having exploded by €500 billion since June, or more than all of QE2). Unfortunately, as the following analysis from UBS indicates, it won't have much of a choice. Here are Europe's numbers: €82 billion in gross debt issuance in January, €234 billion in gross debt issuance in Q1, €740 billion in gross debt issuance in 2012. And then it really picks up because what is largley ignored in such "roll" analyses are the hundreds of billions in debt that financials (i.e., banks) will also have to roll in 2012. In other words, the biggest risk for 2012, in our humble opinion, is that the global repo perpetual ponzi engine (where every primary dealer buys sovereign debt than promptly repos it back to its respective central bank, and courtesy of Prime Broker conduits is allowed to do so without ever encumbering its balance sheet - explained in detail here) is about to choke.
Yes, ladies and gents, the trillions and trillions in total financial, non-financial, government and household debt that are finally coming due will need to find willing hosts wherein to gestate. Alas, said hosts are rapidly disappearing, and as hard as they may try, the global central banks are failing at being willing replacements to the traditional repo ponzi mechanism. But back to the imminent surge in bond issuance of €720 billion which UBS has the following words to describe: "Given the contraction in the investor base for most Eurozone sovereigns on the back of the increased market volatility and spread widening experienced by most issuers, we expect funding conditions to be quite challenging next year. We expect the majority of the issuers to front-load supply in the first three months of the year and to bring to the market a number of new lines with large initial outstanding amounts." Sure enough, enjoy the holidays, because in January things are gonna get very rough: "we expect January to remain the busiest month despite a EUR 5bn reduction in bond redemptions from EUR 63bn in the first month of 2011 to EUR 58bn expected for January 2012. Consequently, net issuance in January is expected to be particularly heavy at EUR 24bn vs. EUR 22bn in 2011." In other words: hold on tight.
From UBS:
We expect issuance of coupon bonds in the first quarter of 2012 to decrease only slightly compared to the same period in 2011. Supply in the first quarter of 2012 is likely to total around EUR 234bn vs. EUR 242bn recorded in Q1 2011. The amount corresponds to around 32% of the overall annual bond supply. Issuance will remain heavy in the first quarter despite an expected reduction in net borrowing by the EMU issuers in 2012 due to significantly higher first quarter redemptions which will increase from EUR 136bn in 2011 to EUR 157bn in 2012.
Given the contraction in the investor base for most Eurozone sovereigns on the back of the increased market volatility and spread widening experienced by most issuers, we expect funding conditions to be quite challenging next year. We expect the majority of the issuers to front-load supply in the first three months of the year and to bring to the market a number of new lines with large initial outstanding amounts.
Yes, that means Q1, and specifically, January.
Of the EUR 234bn of bonds likely to be sold in Q1, around EUR 82bn will be issued in January alone. The monthly gross supply is then expected to decrease slightly to EUR 75-76bn in both February and March. The figures compare to an aggregate issuance volume of EUR 85bn, 78bn and 80bn in the first three months of 2011, respectively. As a result, we expect January to remain the busiest month despite a EUR 5bn reduction in bond redemptions from EUR 63bn in the first month of 2011 to EUR 58bn expected for January 2012. Consequently, net issuance in January is expected to be particularly heavy at EUR 24bn vs. EUR 22bn in 2011.
The increased flexibility in the funding strategies of the issuers, which aims at dealing with an expectedly challenging primary market particularly at the beginning of next year, makes it difficult to forecast the likely issuance patterns of the issuers as the reliance on funding via tap auctions of off-therun bonds will probably increase.
For an increasing number of issuers this will affect the regularity of the re-openings of benchmark bonds and consequently the timing at which new lines will be brought to the market to replace ageing issues. Also, issuance activity will likely become more dependent on changing market conditions and on meeting investors’ demands for specific issues which are hard to forecast ex ante.
A detailed look at January, going down country by country,
Our key bond supply assumptions for January 2012 and the major issuance highlights expected during the quarter are summarized below on an issuer by issuer basis.
During the first quarter we expect further re-openings of the o-the-run 2Y, 5Y and 10Y bonds for EUR 5-6bn and we expect a new 2Y Schatz 03/14 to be launched in late February (EUR 6bn). Therefore we expect Germany’s bond issuance in January to total EUR 21bn and to decrease to about EUR 16bn in February and March.
During the quarter we also expect the launch of a new 10Y OAT most likely on Feb-2 (EUR 5.5bn). This, together with regular re-openings of the 2Y, 5Y, 10Y and longer dated benchmark issues as well as an extensive tapping activity of off-the-run bonds as in 2011 should result in a monthly supply of about EUR 18-19bn in February and March. A new 15Y line could be launched in Q2.
During the quarter we expect the launch of a new 5Y BTP in February (EUR 4-5bn). After the EUR 16- 17bn issuance volume expected in January, Italy’s supply is expected to rise to EUR 18-19bn in February and March due to the heavy bond redemptions of about EUR 26bn and 27bn expected in second and third month of the quarter.
During the quarter we expect the launch of a new 3Y Bono, most likely in February (EUR 4bn). Spanish supply is expected to average between EUR 7-9bn in the remaining months of the first quarter.
The Netherlands also announced a tap of the DSL 01/17 which has been scheduled for February 14 and a tap of the new DSL 04/15 for March 13 (EUR 3.5bn expected for each tap). In addition Holland will launch a new 10Y DSL and a new 20Y DSL in the first quarter. Given the absence of off-the-run tap auctions in the Dutch supply calendar in February and March, we expect the new 10Y DSL to be issued via DDA in late February and the new 20Y DSL to be sold via DDA in late March for a likely EUR 5-6bn each. As a result Dutch supply should total EUR 6bn in January and EUR 9.5bn and 8.5bn in February and March, respectively.
And the non-cores:
- Belgium: We expect Belgium to launch a new 10Y OLO via syndication in January (EUR 5bn), therefore no tap auctions should be expected during the month. After this, Belgium is likely to reopen its 5Y, 10Y and 15Y benchmarks as well as off-the-run issues for an amount of around EUR 2.5bn per month.
- Austria: We expect Austria to launch a new 30Y RAGB via syndication in January for a likely initial outstanding of EUR 4bn, replacing the old 30Y RAGB 03/37. The current 5Y, 10Y and 15Y RAGBs still have relatively small outstanding amounts of EUR 7-8bn and are therefore expected to be tapped regularly throughout the quarter, possibly in combination with small off-the-run lines with lower outstanding amounts for an average monthly volume of around EUR 1.5bn per month.
- Finland: In the first quarter Finland may sell an additional EUR 1.5bn of the current 5Y RFGB 1.875% 04/17 which was launched in September and we also expect the launch of a longer dated issue (most likely a 10Y bond) in mid March for an expected EUR 4bn. Finland is likely to sell 2 new benchmark bonds in 2012 (one in H1 and one in H2, the latter being most likely a new 5Y bond) and to hold 4 tap auctions during the year. The 5Y bond could be re-opened further by EUR 1bn in H1 to reach a final outstanding of EUR 6.5bn while the remaining 2 taps would increase the outstanding amount of the two lines launched in 2012.
Needless to say, the biggest problem for Europe is that unlike other countries, the bulk of the issuance is not to fund net debt (thus new "growth" however Keynesians define this), but merely to roll existing debt, which does nothing for incremental ecnomic growth, but merely avoids systemic insolvency. Alas, as rates keep on creeping higher and higher, this is with 100% certainty a game that the status quo will lose.
Furthermore, with France just announcing the highest unemployment rate since 1999, the realization that new incremental debt has to be issued will dawn quite soon. Alas, with everyone already monetizing their own, the only option will be for the ECB to join the party. Which is why we are confident that the ECB will, if not so much to bail out its banks, as to provide bond demand of last resorts (also known as monetization), very soon enter the printing party. Luckily, by now we are confident all readers know what the natural hedge to a resumption of the race to the bottom is.
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When you blow/piss away $490bn on propping up banks and none of the Eurozone stock markets even notice and continue their decline you realise just how worthless the Euro has become
Time to kill the Turkey at the ECB
...Fed, Bank of England and Bank of Japan to follow for the chop
Something may have already started in blowing up in Europe.
http://sherriequestioningall.blogspot.com/2011/12/email-sent-out-by-roge...
Please no links to unfounded hype, speculation and complete hearsay
You mean like this?
Friday, December 23rd, 2011 | Posted by Gordon Duff Breaking: Patriot Missiles Seized, Sold To China by Israel (Updates)"Finnish authorities have confirmed the seizure of 69 Patriot missiles manufactured by Raytheon Corporation today.
During a routine search of the MS Thor Liberty, a ship flagged by the Isle of Man, at the Finnish port of Kotka, authorities found 69 Patriot missiles of a type capable of intercepting ICBMs, the most modern available and America’s most sensitive military technology."
http://www.veteranstoday.com/2011/12/23/breaking-patriot-missiles-seized-sold-to-china-by-israel/
Silver market is abnormal.
What used to be a stochastic chart is now a discrete step chart. Something is about to happen, and it ain't gonna be pretty.
Most likely, COMEX has already folded like a cheap lawn chair.
i've been wondering WTF all day. anxiously waiting to find out what the deal is.
Illiquid because of the holiday. Someone should short that bitch to $20 so I can load the boat.
yeh those sons of bitches demand that we "give them" these advanced missles to use to protect them from those evil arabs and what does our little "friend" do? they go and sell it to another of our "little friends" the chinese....man these people are out to lunch. of course not a word will be said. and johnny the soldier boy will continue on doing his duty to israhole and fighting and dying for nothing like the good little slaves they are and as far as the amerikan people are concerned. not a word is heard in the gulag about this. not one word ........these idiots cannot put two and two together to spite themselves.........its all very sickening...........
High Plains Drifter
Food for thought.
Why would they do it.
Stop and think about it.
Maybe there are some anomalies in these?, maybe their Salted?,maybe they are MEANT to be put into their hands.
Israel has NO reasonable paybacks for this,China supports Israels enemies,BEST bud' w/Iran,Syria,you name it.
There is more to this than meets the eye,think before you leap.Are these the real deal, are they built with ghosts in the machines?.
Why help someone who is also dedicated to helping others to bring about your total destruction?.
oh by the way, this shit happens all the time . anything you give to israhole will find its way out to the world arms market for sure........they are not our friends and never have been our friends and nobody in our government has the balls to say what needs to be said about these psychopaths.........not one damn person, not even ron paul......
Paul knows how the game has to be played in order to win.
great question... what exactly is "winning"?
Solid, third-party verification to back up your included summary vs a blind link to some lunatic ravings. That's the simple difference between up arrows and downs. Cheers!
Always.........Testing!
One eye open and an ear to the wind!
here's something that isn't and that is sorely lacking in this piece: massive asset sales. that goes a long way towards explaining the strength in the euro in my book: those transactions will be done in euros....until they aren't. once all of "europe inc." is picked clean...then what? "devalue or die"? i'm sticking by my thesis: "tanks in Athens." good article.
that doesn't look like an email, more like a pitch to sell some overpriced newletter subscription about the maya calendar and the end of the world..
Sunnydays.... you left out the part that Sherri just got released from Bazookas Circus where she picked up elephant dung for a living!
Leave Turkey alone - they stayed out of this whole mess and recorded 9% GDP growth!
sorry, should have been turkey with a lower case 't'
and no offence to Turkey who make great knock-off jeans and t-shirts
They should rename EURO to BOOM, or FIASCO ..
or "Eur-over."
Or Dollar!
Oh wait... That one is already taken....
Actually, the names are already figured out :
EuroMark , EuroLira, EuroFranc ....
I'm sure the eurousd will hit 1.35 before it hits parity. While everyone calls for parity, it has to make/hit a few stops on the way down.
Fed is a buyer, Dudley said so. January is in the bag...
Yep, the Bernak, Emancipator of Failed Too Big Banks will start his European shopping tour in January.
We'll print 1 trillion. The US will do the equivalent in dollars to cover it's deficit to and nobody will care once we both send troops to Iran and take our oil back, we'll pretend everything will get better... Untill it doesn't...
OK, I give up. What is the natural hedge that we all know? Gold? Oil? Copper? Dollar?
Hail Marys
The point of writing is to convey information. When the author says that all his readers know something, I think it is reasonable to ask for a clarification, in order to save time.
Gold and the dollar have been falling due to risk-on. No one seems to know if commodities are going up because of hyper-inflation or going down because of deflation. So what's the "natural hedge", even if all this debt can't find a buyer.
By the way, it is only 2 billion more in new money than last year. Hardly a crisis.
I'm sure Tyler was hinting at gold.
Jenks' answer has a lot of merit.
I'd suggest a Bloody Mary.
There is no indication that all major currencies are going to experience hyper-inflation, which is what would be necessary for gold to be a winner in all currencies.
Several countries have quite stable finances, and there is no indication that they are going to go crazy and print money. Canada, Sweden, China, and Australia come to mind.
If there is a global credit crunch like the one three years ago, or worse, deflation may be a likely outcome.
I agree that the debt burdens of PIIGS is unsustainable, and they must default eventually. The fallout of these defaults is unclear. It seems premature to say that it will lead to hyper-inflation and that gold will rally. An equally likely scenario is that the actual default will lead to a relief rally and a risk-on trade, since all the bad information is already known to the market.
Another paid troll. Seems like a whole batch of them came here 1 week 5 days ago.
No pal, no indication whatsoever that all major currencies are going to experience HI.
QE did not happen. Neither did QE2. Europe is in perfect economic condition. So is China and Japan.
Canada you say??? That's not even a true fucking country. RE bubble is bursting there, banks are a shitbasket, and they have next to no gold.
Australia? Same story.
Sweden? Sweden died when Olof Palme was shot point blank by the Vatican.
China? China ain't gonna help the west. Period.
You do realize that QE happened because of a near-deflationary state right?
I only agree with your assessment of China. You should definitely research those other 'non-country' countries before making such claims.
Duh. You just insulted everyone's intelligence by stating the blatantly obvious. The deflation concerns aren't going away, and therefore, print once, print twice, print to infinity. Why would they change the game plan now that there is more at stake than before?
While I do have a substantial position in "the natural hedge", I would like to point out that that despite Japan bailing out their banks and doing repeated rounds of QE, they have been drifting in and out of deflation for over a decade.
The only thing I see as irresistably infationary is peak cheap oil, but even that tends to be self-limiting in that every time the price rises high enough, it pushes industrial economies into contraction (which is inherently deflationary).
Monetization of deficits is driving inflation.
Eventually, politcians will print to buy votes regardless of the true level of economic activity.
Levered assets will continue to deflate as the credit economy deflates to a more sane level.
But the cash economy will continue to experience inflation as the masses spend currency created without commensurate economic activity.
The USD has/had the luxury of exporting that inflation for years, but with the Chinese now having settlement in RMB with BOTH Russia and Japan, should they manage to finagle that with the EZ, the USD days would then truly be numbered.
The "exorbitant priviledge" may have some legs left, but that would require the destruction of competing currencies, namely the EUR, Gold and possibly the RMB or insanely enough the Yen.
The Yen is a bizzare creature, for all the govt's failings, the underlying economy produces more than it consumes, and as long the population and by extension the economic power behind it continues to accept the Yen as legal tender, it should not experience the same devaluation that will inevitably come to the USD.
Bravo.
According to the IMF, Canada is the only G8 country with a banking sector and CB worthy of the name. Bubble burst WILL happen in Vancouver; we can thank the Chinese for that. Has Ft Knox been audited lately without anyone knowing???
The ratio of debt to personal disposable income hit a high of 152.98 per cent in the third quarter from 150.57 per cent in the prior three months, Statscan said Tuesday. The report comes as Bank of Canada Governor Mark Carney is again sounding the alarm over swelling household debt. “Our greatest domestic risk relates to household finances,” the central banker said in a CBC radio interview.
Roughly one in 10 Canadians is in a vulnerable financial position, Mr. Carney said – meaning that the cost of servicing their debt consumes more than 40 per cent of their income – “and that, historically, is where people start to have issues in making their debt service payments.”
If commodities dive and the US goes into a serious double dip recession/depression, Canada is fucked......
Stupid dumb shits, they watch the US implode on a real estate bubble than they go out and copy the same crap,,, just Canadian style..... makes you just kinda sadly shake your head.
Furthermore. the Chinese didn't have anything to do with this but maybe the Harper government did......
"Stupid dumb shits, they watch the US implode on a real estate bubble than they go out and copy the same crap,,, just Canadian style..... makes you just kinda sadly shake your head."
Yeah, but listening to people up here - "We're different." "We won't go through what the US went through" - the hubris and superiority complex vis-a-vis the US up here is unbelievable
i'll give you two right off the bat: natural gas plays and info tech. the demand for both is basically "infinite" right now. at some point i will add a third in solar power...as at some point the sheer "low-ness" of the price...especially vis a vis the performance of said panels which apparently is surging as well... will create extraordinary demand at the consumer level. Still haven't seen anything at Lowe's or Home Depot however...the longer the crazies wait for the "energy induced economic collapse" however...
What's the best way to get into natural gas? Any good ETFs?
Finally an intelligent comment. Basically, this is Marc Faber's position. Equities, energy, and real-estate, which have intrinsic value. The only criticism is that demand can be soft for a while in the event of a slowdown.
Will this be the year the word "quadrillion" is used
Trillionss are adding up
...and then it all resets to zero
it's a funny old game
"Needless to say, the biggest problem for Europe is that unlike other countries, the bulk of the issuance is not to fund net debt (thus new "growth" however Keynesians define this), but merely to roll existing debt, which does nothing for incremental ecnomic growth, but merely avoids systemic insolvency. Alas, as rates keep on creeping higher and higher, this is with 100% certainty a game that the status quo will lose."
So it is better to issue NEW DEBT on top of the existing pile faster and faster like USA is doing? Rollover is not a problem unless the EXISTING bond buyers refuse to rollover and I do not see that happening.
"...readers know what the natural hedge to a resumption of the race to the bottom is."
Canned Tuna, Fishing Line and Firewood.
Will 2012 be the year that the giant Ponzi scheme unravels? Hyperinflation is lurking just around the corner!
Sure. Or deflation. Or maybe the single digit inflation we have now. Let me know when you know which catastrophe it is going to be.
You must be one of the power elite who never have to shop for food.
If you did, you'd understand how food prices have already doubled in many cases.
Or, you could be a teenage script kiddie who eats nothing but McDonalds 99 cent meals and believes he's the second coming of jesus christ.
Actually, I am in the food industry, so I am aware that some foodstuffs have more than doubled in price, for instance apple juice has gone up quite a bit. Coffee is also up quite a bit.
But on the whole, food prices have not doubled, and core inflation is running single digits in Europe and the U.S. So I am not sure what your point is.
Someone is getting a gun put to their head at this moment - and being told "Buy these bonds or your children will walk with a limp the rest of their lives..."
hmmm...table 1 gross bond coupon supply totals 740 bn in bottom right and table 2 principal redemptions totals 581 bn, meaning, presumably that the combined funding over the 2012 calendar year will be just c. 160 bn?
from here you can go to another Table 1, 3/4 the way down and the euro area deficits are projected at c. 3.5% of GDP for 2012 compared to c. 8% for the US, 7% for the UK and 9& for Japan
http://www.imf.org/external/pubs/ft/fm/2011/02/update/fmindex.htm
this represents an improvement from deficits of c. 4.5% in 2011 for the euro area, 10% for the US, and 8.5% for the UK and 10.5% for Japan. this report was compiled in June 2011, so I think its safe to say, things in 2012 have got closer to a deterioration from 2011percentages, so let's stick to Europe for now and say that euro area deficit to gdp for 2012 are likely to be around 5% of GDP.
From the below, euro area GDP is 2.37 tn, so 5% of this implies an increase in net deficit financing of c. 120 billion.
http://www.ecb.int/stats/keyind/html/sdds.en.html
Given this net increase in deficit financing of €120-160 bn or US$150bn-200bn, what is all the fuss about europe for, when the US is staring at federal deficit financing of somewhere around 8-10 times as much for US$1.2 to 1.5 trillion? This federal deficit is well before the states and munis fiscal financing requirements.
And let's not even start on Japan. Now, the Europeans are in a hole and want to stop digging, who took away Japan's and the US's shovels?
Yup, the sky isn't falling, unless it is. The EFSF has plenty of room on its balance sheet to finance European bonds in 2012, even after France gets downgraded. Also, the ESM is set to come online in June 2012. The ECB has provided the needed liquidity to the European banks, and the ECB is talking about slashing rates again. No doubt shit could unravel at any time, but right now Europe has their ducks in a row, and other than the upcoming France downgrade, looks to be better off in 2012 than 2011. Unless 2012 involves a Ron Paul presidential selection, I don't think we can say the same for ourselves.
this just can't be you can it? heh
http://en.wikipedia.org/wiki/Peter_Griffin
again...ASSET SALES. Those really don't lie. The only reason for this to occur is a problem with final demand.
http://www.thenews.com.mx/index.php/business/B01-17818.html
if there's a break up of the EU itself "there go the crown jewels."
EFSF isn't funded and ESM means more debt for everyone involved.
If all economies over there contract, debt burden will grow.
But I do agree they keep making desperate moves which may eventually "solve" the problem the way Japan has done it -i f they survive 2012 and 2013, they'd have at least 5 more years of muddling through to go through.
But if they solve it, instead of "solve it", by pushing austerity measures through, they wont need to do more bond auctions within a few years time. I don't think Germany would be offering to make their full ESM contribution in early 2012 if they didn't have the reassurance the other governments are taking proper steps. Same with the ECB providing the 3 year loans, I don't think Germany is doing this stuff without seeing the light at the end of the tunnel, they could just as easily leave the EU.
The real world is complicated:
http://www.zerohedge.com/news/neutron-bomb-capital-calculations-and-kyle...
http://www.zerohedge.com/news/presenting-kyle-bass-analysis-shortening-c...
Reading is Fun-damental!
2011 for US was 10.9% and you are smoking the crack pipe if you think we get out of 2012 at 8%.
http://www.nypost.com/p/news/national/he_schu_in_XaoXJibNNI16jjroHK7aUM
chuckie schumer's brother in law gets appointed to federal judgeship in new jersey. isn't that special. that don't give a rat's ass about what we think. the fix is in and has been for a long time. isn't that point , painfully clear by now? i sure hope so. and you wonder why i opt out of voting or anything else to do with this wicked and immoral and corrupt system.
its time to take out the trash.,,
For heaven sake's VOTE. What they want is for you NOT to vote.
even better...RUN FOR OFFICE. i've been boning up on my platform: "i'm the crazy Zero Hedge guy." I think i've got 100,000 votes right there...and so will you!
I prefer attending campaign events and making a ass out of myself. You know like asking intelligent questions.
No kidding.
The Euro Crisis and The Great Unwind - Why Monetary Policy Can't Fix Europe's Woes
http://confoundedinterest.wordpress.com/2011/12/26/the-euro-crisis-and-t...
So Europe, Japan, and the U.S. are going to go begging in the bond market in Q1, and the buyers will be...?
allegedly..."the governments themselves." as well "this will only cause a MILD recession" according to ECB President Mario Draghi. good question...as usual there Hansel. Where's Gretel btw?
the Fed and ECB, who else.
look at countries with trade surpluses like china and brazil, perhaps japan, if people want radioactive goods, otherwise..its martians!
Nobody wants Euro bonds, their entire continent is in the middle of an economic collapse.
ditto.
http://covert.mypressonline.com
I don't know - although I'm short Spanish banks, EWP and EWI - here's something to consider. Please hear me out before junking:
The "all is well" crowd may have a point - their deluded optimism may actually make sense. Somehow, the ECB and FED can't let the Euro bite the dust. Beg, borrow, steal or print, they will try to hold things together. There's too much invested now.
For example - Tyler's SWIFT article demonstrated that Europe is sooo heavily invested that they don't want to allow anyone to even devise backup plans in case of a Euro break up, even though prudence demands back up plans be in place.
We here at ZH think there will be trouble in 2012, based on rational evaluation of the facts etc. I just think we shouldn't underestimate the lengths to which the Fed and ECB are willing to go to ensure that everyone comes back into the market.
Just look at everything that's gone on - the propping up of BAC, the LTRO with regard to the Italian banks etc. This is an election year in both the US and France after all, and nothing will rain on Obama's and Sarkozy's parties.
When the phrase "...readers know what the natural hedge to a resumption of the race to the bottom is."; gets used, it's time to recall that America and Europe are poles apart because the Europeans have a primitive-brain fear of hyper-I, and the US of depression-induced deflation.
Further, why assume Euroland will stimulate - their first move will be to try to comply with Maastricht rules.
Always dangerous to project your own values on another culture.
http://mises.org/media/6383/Bad-News-for-Our-Money
Rest-assured, the wrong choices will be made by our fearless "leaders!" The purpose of a System is what it does.
if by "what it does" you mean "sustain itself" then i agree. Bernanke was never going to do anything but print. "success" as it were is what's the surprise--although imo Wall Street will rue the day "Bernanke succeeded." there's no such thing as a "guaranteed outcome"...only choices made, path's taken. when Frau Merkel was about to "buy Greece" in December, 2009..."there was pause." And it was lengthy. "He who hesitates is lost" i said back then. And it's been nothing but collapse and chaos ever since. Ask any of the "Durdens" here: i'm the guy, not them, not anyone else. This is POLITICAL...and has never had ANYTHING to do with economics. So what's on tap? "How about a little Hammer with that Sickle mo fo?" That's what i say...KEEPS coming.
Yes, but when does europe's party end? Or what are the signs/key indicator levels that indicate the end is near? Can't the roll the debt indefinitely?
First six months of 2012. Either the ECB prints and saves the Euro or it collapses.