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The Issue Of 'Moments'
Via Mark Grant, author of Out of the Box,
“What’s on your mind; big boy?”
-Otto Waalkes, famous German comedian
It was inevitable and despite all of the usual huffing and puffing on the Continent; the moves are correct. First Egan-Jones and then Moodys and Germany is downgraded or threatened with a downgrade and for sound reasons. The German economy is $3.2 trillion and they are trying to support the Eurozone with an economy of $15.3 trillion that is in recession and rapidly falling off the cliff. There is just not enough German capital to support the entire enterprise and the ratings agencies are finally taking note of the situation. Moodys also tapped the Netherlands and Luxembourg leaving only Finland with a stable outlook to maintain its “AAA” rating. By comparison the United States has an economy that is $14.3 trillion, that is 125% the size of all of our domestic banks while Germany is overshadowed by her banks, by the recession in Greece, Portugal, Spain and Italy and there is just not enough firepower to withstand the onslaught without consequences. It may be unpleasant but some parts of the equation were bound to give as a matter of economic necessity and it will be the ratings, Germany finding herself in a recession by the fourth quarter and an actual debt to GDP ratio that is getting stretched to well beyond 100% of the country’s resources. If the downgrades continue and are actualized then it will not just be the separate countries that are affected but the whole European construct that will lose its “AAA” status.
“In the end, you are exactly--what you are.
Put on a wig with a million curls,
Put the highest heeled boots on your feet,
Yet you remain in the end just what you are.”
-Mephistopheles
Germany is supporting at Target2 financing operation of over $800 billion, funding 27% of the operations at the EU including the EIB, the EFSF, the possible ESM and 22% of the $4 trillion balance sheet at the European Central Bank. Contingent liabilities which are not counted in the EU’s financial calculations are turning into real liabilities as money pledged to the EFSF has become actualized and as the demands of Spain with a first tranche of $125 billion for her banks, which must flow through the sovereign, enlarging soon as the Spanish banks and the Spanish regions are in quite serious trouble. Italy is also on the waiting list and with a real debt to GDP ratio of 202%, which includes their $211 billion in derivatives and their other contingent liabilities; the funding gap in Europe has gone from probable to actual as the demands of the periphery has shifted pledges of money to the necessity of handing over the money and real Euros, not just promises of them, are now being demanded.
“Even Hell hath its peculiar laws.”
-Faust
The Issue of Moments
We have had several Greek moments, an Irish Moment, a Portuguese Moment and now a Spanish Moment. I am constantly asked if there will be a Lehman Moment and this depends upon your definition of a Moment and the fear factor that accompanies it. Historically, if we note the demise of the Soviet Union, all of the countries that were included in this Bloc were part of the Soviet Union until the Moment when they were not but this occurrence had very little economic effect upon the United States and so was discounted as historical but not financially relevant. This will not be the case with the European Union and we are facing two specific Moments that may change the course of events. The first is Greece #3 where the Troika report will be made public and funding will either be continued or not. Greece is demanding another $50 billion in capital or threatening to default on its obligations which total some $1.3 trillion. Greece could not pay back its debt if it stood on its head and spit olive oil and so it must either be debt forgiveness or the end of funding and the consequences that accompany it. Germany is being forced to choose and it looks like the IMF and the EU are just about to say, “Nein.” Debt forgiveness, in my view, is a non-starter in German politics and it appears as if the long and winding road is about to end.
The second Moment in our gun sights is Spain and with the largest region, Catalonia, who has an economy roughly equivalent to Portugal, supporting an eight year maturity that is now yielding 14.4% the situation for the Regions in Spain is no longer tenable and the prospect of a full blown Spanish bailout is all but assured in my opinion. On two fronts Europe is hitting the wall and the prospects are dismal so that two real and quite serious crunch times are close at hand. The firewall concept has failed, the ring fences have collapsed and the contagion is spreading like wildfire all across the Continent. There is a scant $65 billion left in the EFSF fund and the ESM is hung up in the German courts until September 12 so that the European flanks are fully exposed and I do not even think some sort of ECB intervention will stem the flow of blood that is spreading like a dark stain from capitol to capitol in Europe.
Each new European enterprise gives the markets a shorter and shorter bounce as we all watch the yields in Europe rise, the stock market’s fall and the Euro in serious decline against both the Dollar and the Yen. There has been no Lehman Moment to date but moment-by-moment the decline in the fortunes of Europe diminishes. There is almost no historical precedent where debt paid by the addition of more and more debt has been a successful operation. There is always the inevitable wall or walls and the concrete slabs of Greece and Spain fast approach.
“Misunderstandings and neglect occasion more mischief in the world than even malice and wickedness.”
-Goethe
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Can I have just a moment here?
sure take all the time you need, your gonna be ok as long as you got zee gold!
Possible solution:
Let the lenders hang. Stick 'em with their bad debts. Restructure your money with some sound basis. Become a regional or local producer both seller and buyer. Take care of your own. Get out from under the thumb of the "owners".
Radical.
Can't......what with the Presidential Pardons and what not.
Your heart's in the right place however.
Am. Shall. Care not about pronouncements from the "owners" puppets.
Hows about an anonymousy moment?
Amazing how the resigned consensus opinion amoung those who have correctly called the debt crash is more crony fascist bailouts for socialist bloodsuckers. Can we just try capitalism for once? Is it just too much to let the failures fail, and not punish innocent bystandards with more bailouts? Does anyone actually believe that some type of bailout won't happen? The only thing the equity markets are pricing in is more cronyism.
Never underestimate the power of a great moment.
Can I have a moment here?
Sure thing. That's all we have left. LOL.
Reallity is a B.
"We are already off the fiscal cliff" - Rick Santelli
Heard about the guy who fell off a skyscraper?
On his way down past each floor, he kept saying to reassure himself: So far so good... so far so good... so far so good.
How you fall doesn't matter. It's how you land!
Scotty, you know what to do.....hit that button and BEAM ME UP!!!
http://www.youtube.com/watch?v=gz3F-02FwZc&feature=results_video&playnext=1&list=PL43FAF29C74013042
this is the moment we are waiting for... C'mon , hurry up Europe time to get it on!
Excuse me while I scratch my Bernanke for a Moment.
Germany
The door is closing
Get out while you still can!
Abandon this unholy union!
GERxit before it's too late...
"Mr Rompuy, tear down this mall." - Bonzo
Don't worry. I'm sure that when market conditions get bad enough Ben will be glad to turn on the printers. After all over here in America we have embraced our debt serfdom.
Learn to love the debt
Love will set you free
We have yes...but the rest of the world has not...and they will dump the dollar as fast as they can....and they will..we will no longer be the reserve currency....and that has huge implications..
and that has huge implications..
Bring 'em!
I'd rather face a harsh reality than a pleasant tapestry of lies. Reality can be worked with; lies fall apart in your hands.
Dump the dollar - for what - the fucking Yuan?
I hear this all the time...and no one drops the other shoe: what the reserve currency will take the USD's place.
Let's look at the alternatives.....
The Euro? Please...........
The Pound? Again....please
The Ruble? Like bankers will trust the Ruskies...and the world's population will scoff at that one....so please.
The Dinar/Indian Rupee?....or any of the commod. currencies? Give me an argument for one of them...........
I can see the dollar selling off vs. many currencies, but when it all boils down to it, I don't think the Singapore dollar or the like going to take it's place.
That leaves the Yuan...and the world's people - again - will not move to it as the "reserve currency" - unless there is total fucking war, and the Chinese win outright.
So please..enlighten me and us as to which currency will take the USD's place....
A gold-backed SDR which includes Yuan in the basket of currencies that define it.
That is a possibility GMad.....but again, the Yuan is not even floating. Hard to imagine the world's banks supporting that as the lead in any type of SDR. China books are so corrupt - in every way.
I can see a basket type of arrangement, using all the currencies...but again, leaving it up to the fucking douchebag politicans and criminal banker-assholes is frightening.
Leaving it up to the IMF and WorldBank even more so. I'd have more faith in a committee of janitors.
The SDR doesn't have to lead with the Yuan, it would be a lesser weighted contributor, but it would be present which is unheard of before now.
Witness the unabashed flow of certain metals into China and the cold shoulder they've turned to USTs.
I wouldn't expect China's books to be any more or less corrupt than Wall St or The City...greed is a universal human fault, unfortunately.
I was going to say the same thing - a gold backed Yuan...
This would explain why China is buying tons of gold. However, if they came to market now with a gold-backed currency it would likely appreciate quickly and kill their export business, which is currently their lifeblood. Look at what a strong currency did to the Swiss economy and the unprecendented intervention that is taking place to protect their interests.
I think the Chineese are sitting back, buying gold and oil (hard assets), waiting for the collapse of the fiat currency model. When this happens they'll be in a far stronger position than the rest of the world and can pretty much dictate the terms of the new financial system, whatever form it takes...
The dollar will eventually be dumped, but it will come over time, moment-by-moment, line by line, event by event... I think China is playing this the right way, while the US and other developed countries are so caught up in their own little political crap and are missing the big picture. We (Developed nations) are asleep at the switch while others are preparing correctly. I don't believe this will end well for the current Developed world, and they may turn to military force when their backs are against the wall and they don't feel like there are any other options.
Many ZH'ers keep saying they can't wait for the collapse, but i would say be careful what you wish for. It is likely to be far worse than what you've imagined, and gold, beans, and guns simply will not carry the day. This is something for which we cannot prepare...
Gold, Silver.
It feels like "Waiting for Godot". In the end Godot never makes an appearance.
"[16] Lucky and Pozzo depart. The same boy returns to inform them not to expect Godot today, but promises he will arrive the next day. The two again consider suicide but their rope, Estragon's belt, breaks in two when they tug on it. Estragon's trousers fall down, but he does not notice until Vladimir tells him to pull them up. They resolve to bring a more suitable piece and hang themselves the next day, if Godot fails to arrive.
Who is John Godot?
Waiting for Godot. An absurd play about two guys waiting for someone to arrive.
John Godot, not to be confused with John Galt.
Thank you, Johny.
I wuz gittin' nervous 'bout that....
With ZH's negative nabob attitute Americans would still be paralysed after Pearl Harbor and California would be called New Japan.
So whats the alternative smart guy? Listen to our perma-cheery MSM and our blowhard politicians like in 08 who were signaling all is well right before everything came crashing down and millions lost thier whole life savings. Is that the America you are opining about, one were we just sit and are spoonfed lies to labotamize us to the truths?
He took the blue pill instead of the red one... don't get mad at him!
Being ueber-perma bear is just as bad. ZH intentionally tries to spin all news as negative as possible and then some. Eurozone is supposedly collapsing every other week and USA should be by now ruled by war lords and mutant monsters, according to ZH.
what is your point???
The eurozone IS collapsing every other week, only to be saved temporarily by adding more debt to the taxpayers.
The USA IS rulled by the war lords, and mutant monsters.
what is your point???
The eurozone IS collapsing every other week, only to be saved temporarily by adding more debt to the taxpayers.
The USA IS rulled by the war lords, and mutant monsters.
Time to consult your doctor and adjust that dosage before you get hurt, skippy.
Just sitting back to watch one half of the Illuminati blow up the other in the CoL...
So who has the bigger problem? Greece or Germany?
Germany I'm afraid. Look at what the ECB/EFSF/the other shitheads have on their books and who has to back them, when they need a recapitalisation.... They still got those Greek bonds at par value on their books (in comparison to the private holders who got a ca. 80% cut). Remeber the ECB got its own new ISINs with PSI.
France.
Why all the fussing about Germany and Greece? When the half wit blue bloods decided that all this nonsense in the 90's. I recall many people spouting the mantra about lifevests and how the mediteranian region would act like one.
Even though historically the entire area can't keep it's shit together long enough to avoid the dozens of dicatorships it loves to subject itself to and the last time a currency was worth anything in the region was 1900 with the Spanish silver dollar.
Germany. Another Cubic Zirconium in the lead crown of Europoor. It's a country that can't help itself invading it's neighbours since the time of the goths and the Roman's show them how to wipe their asses with something other than a hand and introduced them to running clean water. If it weren't for mediveal russian/mongolian influences the country would be Stone huts.
The country to watch right now is France.
what blows my mind is markets (dow) down fut -16
more like -1600 to reflect the freefall from contagin
what am i missing?
what could go right?
pass the suringe, hurry im down...
What you are missing is a combination of plunge protection team and the sense of complacency amongst the masses which has been cultivated by the authorities.
alright, then we are the 1 percenters of knowledge.
this knowledge should make us rich; then what could go wrong?
ppt of eu running out of options; lender of last resort meeeting now as we type to bail the euro failure.
trillion plus of loan underwrite from fed reserve of ussa.
what else will save the eu? 9/12 german ruling an eternity away as funding at crisses level in spain/italy.
eu can not meet and get cobbled together a tunaquet(sp) faster than blood flowing, hence transfussion from ben..
JMFO
Not unrelated phenomena. They'll do everything we let them get away with.
"but moment-by-moment the decline in the fortunes of Europe diminishes"......
and the fortunes of the Europeans...the markets are down..their bonds are way down..and will never be paid back..Real estate is down...the only things going up are commodities like food...and that is not good...I assume their "wealth" will be cut in half from this failure...much of that lost capital will takes years to return...if ever...other Countries and companies will take over their markets...the people will suffer...their way of life...which I think needed to change will get harder...they will have to work harder and make less..first just to survive...then to prosper...
Of course, Krugman and friends would have us believe John Maynard Keyes can save us from reallity.
Oh the irony in that.
LVMI www.mises.org
Nothing can save you.
Silver drachmas, bitchez.
Spot on. If they had silver drachmas then even in a collapse scenario these coins could allow exchange to take place. Better still a smart Greek government would lodge simultaneous orders in different markets and with different dealers for 5 to 10 billion dollars worth of silver and then watch silver's price blow upwards by 10 to 20 times. Hey presto!!!! debt burden reduced to almost zero.
"Smart Greek government"...seriously? If that was an option, they wouldn't be here now.
"lodge simultaneous orders in different markets"...with what?! Yogurt?!
As for silver drachmas, Gresham's law would eat them alive.
Look, I can make your brain disappear..."Presto!"
they will be able to buy the silver for few billions of euros (they could sell the bonds to ECB to raise the money), before it becomes out of stock item.
Elegant
And eminently doable.
Goldman can arrange the transaction
(Meaning it can get done)
the whole country made into muppets by Goldmans. It would be fitting to get the squid to arrange the sale of the debt so the Greece can buy the silver bullet for the squids demise.
"Money, it's gotta be the shoes!" - Spike Lee
http://www.youtube.com/watch?v=BhHONpmlxPc
"Auf wiedersehen" to Za rest of Za PIIGS from Za Jarmens - Vee heff vays of mecking you pay.
"We playin' a trick on you!" - Mr. Panos
Germany actually likes the debts of europe.
Here's why; http://howhitlercametopower.com/
"Go Romney!" - Master Race Superpac
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