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Remember When The Dynamic Duo Was Batman And Robin
From Peter Tchir of TF Market Advisors
Remember When The Dynamic Duo Was Batman And Robin
The market is essentially frozen ahead of yet another Merkozy press conference. I have lost count of how many of these press conferences they have had. I haven’t lost count of how many resulted in anything particularly useful – zero is an easy number to remember.
So what are we going to get?
Renewed commitment to minimal budget deficits?
That was part of the original deal of the Euro. That was part of the “compact” that was released late last year. It seems so long ago, but just last year, the Merkozy had a conference and said a lot of good things that they couldn’t get the full summit to agree to. Maybe they will promise budget surpluses by 2035? These “budget” solutions are all so far away that they don’t make a difference to the near term solution, or are so unachievable in the near term that they don’t take pressure off either.
Letting the ECB go ahead with quantitative easing?
That is possible, though it appears that the ECB skipped QE and went straight to QGG (Quantitative Gift Giving). They aren’t buying too much sovereign debt, but they are willing to lend to banks using any collateral they can scrape up. They are fully encouraging banks to issue bonds to themselves, get a government guarantee, and post it at the ECB for some fresh money. I think that while many investors have been staring at the SMP (Secondary Market Programme) and whining that full QE isn’t being applied, the ECB has gone beyond that with other programs. I remain somewhat confused by why the ECB won’t lend to banks directly and are requiring banks to get government guarantees. Is it to put added pressure on the sovereign not to default, since a sovereign default would drag the banks down with 100% certainty now? Is it to put pressure on sovereigns to continue to support banks, since now a bank default could drag down a sovereign? I’m not sure why they are doing it and why these steps are necessary, but it does seem to ensure contagion within a country, rather than preventing it.
Between SMP and all these weird collateralized lending programs, the ECB has been pumping money into the system, and a big portion of their purchases, and lending, is against assets that are highly likely to default! Quantitative Easing implies some ability to get paid back or to stop easing by selling assets back to the market. Quantitative Gift Giving is simply throwing money at assets that will never be repaid. How did Greece come up with €1 billion to buy preferred shares of NBG?
Creating a worse bank?
Maybe the Germans will finally relent and agree to some form of banking license for the EFSF? If the ECB is now the bad bank (and any quick look at their balance sheet show it is), then this would become the worse bank. It would be a depository for anything and everything that has no real value? Maybe something like this is announced. That would provide the biggest pop to risk assets, which should be immediately sold, since it doesn’t fix any of the problems with EFSF, it just shifts them around.
Time to be chastised?
I think there is a chance that Merkozy come out of this meeting swinging. They use threats to scare the rest of the Eurozone into doing what they are told. After months of minimal follow through on any of the Grand Plans maybe they are going to try scare the rest of Europe into playing nice. No one seems to be expecting this, but it may be the only thing that makes sense. Maybe it is finally time for Merkozy to point out that Europe needs them as much as they need the rest of Europe.
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Asia didn't do much, we saw some buying in the EUR soon as Ldn was open this am. Lets see some sell the news now that Merkozy is done, lots of downside left in the EUR crosses (ex-JPY) anyway
Tweedledumb and tooleedledee are just playing their punch and judy nonsense for the masses. If only it was genuine comedy eh?
I get the feeling that while judy gets punched, somethign will rise from Italy again. Pols have no power. Technocrats do.
And Italy has been described as the first real Technocratic government. Which is frightening. And a Unity government to boot?
The boot that will kick the EU's ass.
ori
/truth/
Remember when the lady wore heels and the gentleman picked up the tab?
hh, that calls for the appropriate photo.
ori
Real Duo.. secret tape of meeting..
http://www.youtube.com/watch?v=T5EQWhghRVY
i stand corrected. i thought the new dynamic duo was kim and khloe.
i don't know what to believe anymore.
If this is not QE, where does the ECB cash come from to provide these loans? It seems to me that it is created out of thin air.
yeah, seems like everyone waiting for qe and that's what they have been doing all along
Probably from the quarterly Mark-to-Market of the gold reserves. They "made" 3.6 billion euros this last quarter.
the market now has to stay frozen for five years; for sleeping beauty to wake up from her beauty sleep and say "eureka" capitalism lives again!
Excellent. That means we have a soundtrack to their boondoggle...ery.
http://www.youtube.com/watch?v=_mhiGvY1j_Q&feature=player_detailpage
Zero is easy to remember. If nothing else, it is the number of Presidents that were worth a shit that the US sheeple have elected in the last 50 years.
Wasnt there a movie about this? I think it was called Titanic. I remember something about all steam ahead and "the ship cant be sunk."
Batman and Robin... you gotta be kidding me.
Sarkozy going all X-Files:
*SARKOZY SAYS `WE BELIVE IN THE EURO, WE BELIEVE IN EUROPE'
Which is so much against what he was expected to say (/sarc)
I'm not impressed with today's performance, the euro is dropping but both Obama and Bernanke have done much better jobs of tanking their currencies with their press conferences.
And if everybody claps hard enough Tinkerbell will be saved.
this is disgusting at best. merkozy is the joke of this filthy century.
....a depository for anything and everything that has no real value.
Sounds like the Capitol in DC.
*MERKEL SAYS NO ONE SUMMIT WILL SOLVE ALL EURO PROBLEMS
That's why there's abt 25 summits per year...
summit planners must be in demand...big growth industry in europe
A zillion meetings and still only two choices.
1) Print
2) Don't Print
There is no third choice no matter how many meetings, press conferences, interviews, spin, etc, we are burdened with.
MSM bobble heads need something to confuse the sheeple with... So, the meetings will continue... until some black swan appears and the whole damn world economy blows up.
Printing is happening all the time. The question is 1) is it happening fast enough?, 2) who can afford to go into more debt to reach the needed speed of printing so the Euro will be saved for some years? The answers: at 1) No, 2) Germany. Merkel is playing hard to get and Sarcosy being frence knows this game very well. He needs her to pay so he can keep the power in Europe. If she refuses...well he has THE bomb after all...
that is scary thing, i think they already are printing and somehow have managed to convince most analysts that they aren't
Sweet! An entirely new week for horseshit news stories designed to keep a bunch of overpriced garbage elevated. Everythings fine! Hurry and go buy a 0% car while supplies last!
These two muppets have the lead roles in something far more entertaining than Batman.
Kermit and Miss Piggy! Now it all makes sense!
"They use threats to scare the rest of the Eurozone into doing what they are told." - "Every action has an equal and opposite reaction" they will push them selves over the threshold sooner or later to be opposed by a force of equal or greater strength
How is Uni Credit this morning...pink sheets
Can you name the year this statement was issued???
"In the pact, countries have committed themselves to attaining medium-term budgetary positions that are close to balance or in surplus, so that they will be able to deal with the normal fluctuations of the business cycle while keeping the general government deficit below 3 percent of GDP.
Countries will submit medium-term "stability" programs once a year to the EU's Council of Ministers, on the basis of which the Council will assess the compliance of countries' budgetary strategies with the SGP's medium-term goal."
http://www.imf.org/external/pubs/ft/fandd/1998/12/knot.htm
They meet and the world gives a collective YAWN.
http://confoundedinterest.wordpress.com/2012/01/09/merkel-and-sarkozy-to-issue-budget-rulebook-for-the-17-members-market-reaction-is-muted/
Ehm... look people... IT IS NOT FUNNY ANYMORE!! Erhm... just Boooooooring... I heard they did this face-transplantation in Flanders (Belgium for Americans;) - isnt that a a neat trick? I DO Think so! Wait until Merkel starts to sound like Bubba, then eh... row your boat to the Moon!