Tyler Durden's picture


From Mark Grant, author of Out of the Box

Hope Springs Eternal - Then Reality Shows Up


"We need more Europe. We don't only need monetary union, we also need a so-called fiscal union," she said. "And most of all we need a political union -- which means we need to gradually cede powers to Europe and give Europe control."


                             -Chancellor Angela Merkel; June 7, 2012

This comment seems innocuous enough on its face, more political rhetoric; but maybe not. No one is kidding anybody. Europe is controlled by the country with the largest and most stable economy and that is Germany. As money has fled from the sovereigns in Europe; it has poured into Germany as being “best of class” so as everyone else falters on the Continent and has slipped into recession there is but one man standing and that is the Berliner Bear. If there is someone serious that thinks that Germany does not presently control Europe; I have yet to find him. So what is Germany really saying here; let me give you my translation:
We need more Germany. We don't only need monetary union, we also need a so-called fiscal union," she said. "And most of all we need a political union -- which means we need to gradually cede powers to Germany and give Germany control.
You may ascribe what motives you like from the benign to the most worrisome but, to me, the implication is obvious and the case being made by Berlin is quite clear and requires no Wizard of Oz to look behind the curtain and see who pulling the levers. As I reflect back historically here is the manifestation of destiny; the “third time is the charm” in action. It was quite impolite prior to World War II to discuss what was going on in Germany as hadn’t they assured everyone of what they were not going to do, hadn’t they signed any number of treaties promising a world of peace and prosperity and why would anyone think anything else as that is what they told us and yet, as our forefathers so painfully learned, what was said was not exactly what then took place.
There are many, today, who will get riled and raise their backs that I even deign to bring up this issue but it must be brought up, it must be considered if, for no other reason, out of consideration for those that gave their lives to stand in defense and while a final conclusion does not need to be found it would be very wrong not to honestly look at what is going on and wonder and so I wonder.
Spain---Fogged In

 “For what we regard as reality is conditioned by the theory to which we subscribe.”


                          -Stephen Hawking

Lately I have listened to many that seem somewhat confused about what Europe can and cannot do presently and so I thought I would take a moment this morning to set the table straight. First and foremost there is no ESM, it does not yet exist and so cannot be used to do anything. It may well come into existence somewhere between July-September but it is not yet in existence. The present stabilization fund, the EFSF, has depleted assets after the bailout of Greece, Ireland and Portugal and has nowhere near the capital that would be required to provide any real financial assistance to Spain. The EFSF also can only give money to sovereign nations and has no authority to give money to banks and while this could be changed it would have to go back to the national parliaments to get changed and it would take months to revise its charter which is something that has not even been started so the conjecture about using the EFSF to give money directly to the Spanish banks is just hopes and prayers based upon misinformation.
In fact, there is only one European institution that is already authorized to give money directly to banks and that is the European Central Bank but this is also a construct that is full of with difficulties. Yesterday Spain was downgraded three full notches by Fitch with a negative outlook which complicated matters. What is the ECB to do just hand some of the Spanish banks $125 billion which is more likely $350-400 billion in my estimation and to which banks; just some of the Spanish banks or all of the Spanish banks and who is to supervise the re-capitalization as the banks are supervised by the Spanish Central Bank and not the ECB and so the banking system in Spain would have to be totally re-organized and power ceded which would likely take months, if politically possible, and what would the other nations in Europe say if the ECB is to help the banks of just one country when they did nothing for Dexia (Belgium, France and Luxembourg) or the Irish banks and one could reasonably imagine screams all across the Continent.
Perhaps some novel solution is found but this is not the muddling along kind of thing at all. This is the changing of charters kind of thing, the changing of national banking regulations kind of thing; the ceding of power to Europe kind of thing and anyone who thinks that this can all be accomplished in a matter of days is out having tea with Cinderella’ fairy godmother. Yet equities have rallied and bond spreads stopped widening on just this kind of hope but I predict that this will all be short-lived because, on its face, it is irrational. There is nothing wrong with having hopes and prayers but to base investment decisions on irrational interventions of some Divine power where there is not even a door for the Divinity to enter is just poor judgment by this name or any other you may concoct. It is no longer a case of “Risk on/Risk off” but of “Reality on/Reality off” and I advise you to keep pressing the “Reality on” button!

“Reason is a choice. Wishes and whims are not facts, nor are they a means to discovering them. Reason is our only way of grasping reality; it is our basic tool of survival. We are free to evade the effort of thinking, to reject reason, but we are not free to avoid the penalty of the abyss we refuse to see.”


                          -Terry Goodkind, Faith of the Fallen

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Fri, 06/08/2012 - 08:55 | 2506774 Fips_OnTheSpot
Fips_OnTheSpot's picture

EU is dictatory and is NOT german(y)

Fri, 06/08/2012 - 09:02 | 2506800 evolutionx
evolutionx's picture

Bundesbank Target-2 alarm:

almost 700 B in May + 55 B

Fri, 06/08/2012 - 09:14 | 2506837 Zaydac
Zaydac's picture

This is what matters now. There is a breaking point for Target 2 and when it breaks the whole European dream just falls apart.

Fri, 06/08/2012 - 10:01 | 2507011 Zero Govt
Zero Govt's picture

the entire European dream was a figment of the vivid imagination of small groups of politicos, only a few thousand out of 260 million citizens who didn't give a crap in the entire 50 years of idealistic windbagging

Europeans are integrating in their own sweet time, shame the politicians blow so hot and cold (watch the rattles being thrown out the pram over next couple of years)

Fri, 06/08/2012 - 10:08 | 2507040 Fips_OnTheSpot
Fips_OnTheSpot's picture

Please mark the breaking point for me.

Fri, 06/08/2012 - 08:56 | 2506776 the 300000000th...
the 300000000th percent's picture

Everything is red this morning silver, gold, gasoline, WTI, Brent, copper, heating oil, nat gas. 

Fri, 06/08/2012 - 09:23 | 2506873 gjp
gjp's picture

Don't worry, la-la land Nasdaq is only spitting distance from green.  Reality-free zone.

Fri, 06/08/2012 - 08:56 | 2506778 disabledvet
disabledvet's picture

"And now you know why you fail." Sucking up all the money is NOT control moron. It's CHAOS.

Fri, 06/08/2012 - 08:57 | 2506781 Temporalist
Temporalist's picture

Is it considered treasonous to be the leader of a country and suggest that you should cede sovereignty to another authority?

Fri, 06/08/2012 - 09:00 | 2506791 Fips_OnTheSpot
Fips_OnTheSpot's picture

yes!! explicitly mentioned in our so-called constitution.

yet the MSM is sleeping very well (on order...)

Fri, 06/08/2012 - 09:00 | 2506789 mrktwtch2
mrktwtch2's picture

the germans tried to take over europe using didnt they are trying to do it the george soros way..with debt but as the old saying goes if i owe you 100 dollars its my problem if i owe you i million its your problem..

Fri, 06/08/2012 - 09:20 | 2506858 GMadScientist
GMadScientist's picture

That should really read: "...I owe you a million, it's OUR problem."

The dipshit with the $1M liability won't be getting loans anywhere else.

Fri, 06/08/2012 - 09:30 | 2506909 youngman
youngman's picture

no its more like...."can I have ANOTHER 100 Million please"

Fri, 06/08/2012 - 10:04 | 2507026 Zero Govt
Zero Govt's picture

..and the rest

remember the ECB Stress Tests passed all the EZ Banks.. next minute we were €2 Trillion down

then there was Bankia owing €4bn... 4 days later it was €16bn

the state of auditing and accountancy in Europe is waaaaaay beyond farce

Fri, 06/08/2012 - 09:01 | 2506792 Ethics Gradient
Ethics Gradient's picture

There have been so many instances where commentators thought the end was nigh for Europe and it hasn't happened. Markets have now been lulled into a false sense of security.

Fri, 06/08/2012 - 09:01 | 2506794 the 300000000th...
the 300000000th percent's picture

Its like hilter but with new stealth technology

Fri, 06/08/2012 - 09:05 | 2506807 Auburn
Auburn's picture

WSJ: BREAKING Obama to make statement on economy at 10:15 a.m.    great - that should f up the markets again.  More bullish b.s. that means nothing.

Fri, 06/08/2012 - 09:16 | 2506841 resurger
resurger's picture


Fri, 06/08/2012 - 09:16 | 2506842 SheepDog-One
SheepDog-One's picture

I dont think free crack addicted markets want to hear how organically 'good' the economy is....everyone knows thats just BS markets want the FREE MONEEEZ!!

Fri, 06/08/2012 - 09:19 | 2506853 Winston Churchill
Winston Churchill's picture

Every time Obummer speaks the Dow tanks and gold rises.

When the Bernake speaks Dow rises and gold sinks.

Please Pres.Obummer speak on the economy everyday.

Fri, 06/08/2012 - 09:21 | 2506861 GMadScientist
GMadScientist's picture

You're right: he should say nothing so you can complain about that instead.


Fri, 06/08/2012 - 09:09 | 2506813 Abraxas
Abraxas's picture

OK this is already going far longer than anybody could expect (except for MSM). I have a feeling they are playing with us peoples of developed and undeveloped world alike. There is scary news after scary news, and every time if we don't make a concession, we are all screwed. Oh, my god! The banks are underfunded, everybody empty your pockets or else. Darn, it’s the countries now. Well, you know the drill, have to cut on the healthcare, social care (cause that’s where all the money goes). And to help us, they are not going to cut all of it, they will just redirect where the money goes. They are constantly building a straw man, and then using cannons and missiles to take it down. Solution IS the problem.  

Fri, 06/08/2012 - 09:29 | 2506898 Paul Atreides
Paul Atreides's picture

Passive Resistance:

Withdraw unused funds from the banks, stock markets and store them in physical Gold/Silver.

Civil Responsibility:

Stand up, organize, protest and fight back against the government. Join your local occupy, join your local rally, join your local favorite political party. Be the change you want to see in this world.

Fri, 06/08/2012 - 09:18 | 2506829 Paul Atreides
Paul Atreides's picture

"What these guys in the EU are going to try to do is, as this crisis gets worse and descends, there will be an attempt at some point in the next few months for them to set up something that will be very like a dictatorship." ~Nigel Farage almost one month ago to the day.

Fri, 06/08/2012 - 13:38 | 2507929 DosZap
DosZap's picture

"What these guys in the EU are going to try to do is, as this crisis gets worse and descends, there will be an attempt at some point in the next few months for them to set up something that will be very like a dictatorship." ~Nigel Farage almost one month ago to the day.

Welcome to our world.

Fri, 06/08/2012 - 09:16 | 2506840 Winston Churchill
Winston Churchill's picture

Its Fourth time is a charm,not third.

The forgetten war in 1871.

Fri, 06/08/2012 - 09:22 | 2506865 GMadScientist
GMadScientist's picture

"But the fourth one, stayed UP!"

Fri, 06/08/2012 - 09:24 | 2506876 adr
adr's picture

The reality is the world is broke. Decades of future growth was sucked up to cover the losses during the speculative debt boom. What was criminal activity was made legal, and those engaging in criminal activity were given a pass.

It is like a bank robber, who took what was in the vault and was told by the bank manager that not only was that cash his, but ever dollar that came into the bank for the next ten years. He could walk in any time and take his money, the cops would never be called and the bank customers would never know.

How did market speculators get away with making bets totaling more than 100x the global economy in less than ten years?

Reality has also become nothing but a channel stuffed illusion. The retail space is nothing but a stimulus funded dump of produced product that has no chance of selling. Through the miracle of modern accounting this product is somehow counted as sold, even if it sits on a shelf. Same store comps are based on increases in inventory, not increases in sales. All of it done to juice stocks for insiders to sell. Or GM really did load up dealers with 1 million cars in the anticipation of selling more units on average than any year in history. Either way GM gets to count them as sold.

On blogs and social media sites, paid viral marketers post fake praise of products and services in an attempt to influence others. They also slam the competition claiming product failures and glitches that don't exist. Reality being changed through lies and deceit.

Our reality is a fraud, a cheap trick. A scam to make select people wealthy without ever needing to actually work, or produce something of true value. 90% of labor is wasted on menial tasks to support the illusion that our largest corporations actually produce something of value to the ecnomy.

Fri, 06/08/2012 - 09:38 | 2506938 slewie the pi-rat
slewie the pi-rat's picture

yep, in spite of the gross mistranslation angela ain't talkinBout no quickyFix is she?

so i guess the EU and maybe even beyond is slowly percieving:  in the short run, things suck unless you are tooled up for a little more deflation

this is gonna put a lotta the toy-boys who get paid to know how to grow the economy in the snap-line and summa dem managers who get paid to grow 0PM may join them along with the most brainwashed clientele, altho i pray that robo may be spared

however, once the panic sets in/panics set in, maybe things will go like a bunny and it won't take long for the banksters to say: we just finished this great plan!  see whatcha think? 

then the finiMinis can tell their bosses:  do it, BiCheZ!  we can buy some time till you work out the political framework

so they will unan-i-mouse-ly adopt it!  but everything will be conditional on meeting standards and behaving better, conditionally

and they will hafta promise, too...

so, that's bullish, right...?  L0L!!!

Fri, 06/08/2012 - 10:06 | 2506989 Zero Govt
Zero Govt's picture

seems eminently sensible to cede powers to the "best in Europe"... if the rest of Europe was as industrious as Germany there wouldn't be a problem

jingoistic flag waving aside who could argue?

ok never going to happen, let's go down waving our national colours (what's left of them!), pride before a fall

Fri, 06/08/2012 - 10:50 | 2507262 Spastica Rex
Spastica Rex's picture

Why not cede power to the "best in the world," then? Why stop at the supra-national level? Let's go global, all flag waving aside.

Fri, 06/08/2012 - 10:00 | 2507005 Vince Clortho
Vince Clortho's picture

So Frau Merkel has ditched her German attire and is now revealing her new role as a puppet for the Globalist Bank Cartel.

I am guessing this will not play well in Germany.

Fri, 06/08/2012 - 10:08 | 2507033 Zgangsta
Zgangsta's picture

Sure seems like Risk On to me...

Fri, 06/08/2012 - 11:58 | 2507553 earleflorida
earleflorida's picture

                    "Reality" v. "Risk"

R - rational

E - empirical

A - accentuation 

L - lucid

I - intuition

T - tangible

Y - yore

Summary: everyday we get out of bed and venture into the outside world, we risk the reality of never coming back --- so take your reality - and risk`what's predisposed in the recesses of your tiny small mind's - and live the mystery of fate to its fullness? [fuck reality :-))    jmo?] 






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serema's picture

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