Roubini Confident Europe's Born Again Virgins Will Not Satisfy Germany

Tyler Durden's picture


In an excellent summary of the world's interconnected nature, reliance on everyone else to solve their problems, and Europe's epicentric catastrophe, Nouriel Roubini joined Bloomberg TV's Tom Keene for some serious truthiness and doomsaying. From the 'slowdown/recession becoming a depression' to 1930s CreditAnstalt comparisons and Germany's lack of trust that a few years of abstinence will regain peripheral Europe's virginity, the original Dr. Doom along with Ian 'G-Zero' Bremmer offer much food for thought as to the various scenarios as investors anxiously await an expected central bank response to the 19th failed summit and how "we will be lucky if we end up like Japan" as he concludes: "It’s getting worse, there’s already a sovereign debt crisis, a banking crisis, a balance of payment crisis, an economic crisis and all of those things together are getting worse."




Roubini on the European Redemption Fund proposal:

“It is a limited proposal for e-bonds that will only be temporary for 20 years with all sorts of caveats. The Germans and Merkel have said no. Why? They worry about three things. one is about moral hazard. they say if we could agree on these things there will not be enough effort by Italy and Spain. Secondly is a time consistency problem. If you agree on that stuff and then they don’t deliver, then Germany is going to take a lot of risk. Three, there is a huge amount of credit risk the Germans will take by backstopping both the debt on one side and the deposits. The Germans say moral hazard, time inconsistency and credit risk—I don’t want to do it.  They say, ‘you lost your virginity. Now you sign a contract; you say, 'I'm a born-again virgin.' Be abstinent for the next two years. Show me your soul and two years from now, we're going to get married. But today, I commit to marriage today? Forget it.’ The Germans don’t believe and they don’t trust the periphery.”

Roubini on how to get decisive action in the euro zone:

“The European leaders already had 18 summits of the leaders in the past two years. The last summit, the headline newspaper was the leaders decided to postpone key decisions. Now there are 19 summits. Now they're supposed to come up in one summit with a political union, with a banking union, with a fiscal union, with a transfer union, with a growth compact and resolve the problems that haven’t been resolved for years.  Changes are the Germans are want to say no to European-wide deposit insurance.”

Bremmer’s view on global problems:

“First of all, I see that irrespective of whether you are a Democrat or a Republican in the United States, you are basically telling the Germans, “come on guys, you have to do something.”  But we’re not going to play a role in that. I look at the Chinese government despite that they are awash in liquidity right now.  They’re not prepared to actually provide any concrete support for the Europeans, so the Europeans must do this themselves.  We’re not going to act as the lender of last resort for the euro zone.  At the same time, I see plenty of other global problems banging along where everyone is kicking the can down the road.  The willingness to kick the can right now for the United States, Japan, Europeans, the Chinese, has been an elite motif really since 2008.”

Roubini on the persistency of real economy slowdown:

It’s not just a slowdown…The recession will become a depression. Output has fallen from the peak 15% in Greece.  The same thing in Spain...This could become like Japan, but worse. Japan did not have a sovereign debt crisis because it was a net creditor country. But all of these countries are net debtors. They would be lucky to end up in stagnation like Japan. It’s getting worse, there’s already a sovereign debt crisis, a banking crisis, a balance of payment crisis, an economic crisis and all of those things together are getting worse.”

Roubini on German leadership:

“There is this gap between them saying we don’t want to take all this credit risk of backstopping of $3 trillion of Spanish and Italian debt.  We don’t want to take all the credit risk of backstopping all the deposits of the euro zone.  But then the other side says, unless you do something about it, in spite of our fiscal effort, the spreads are so high, the disintegration fragmentation of the banking system is becoming worse, and therefore we’re going to end up in a complete cliff. The German one side the one guarantees that these guys do enough reform and austerity, the other side says we’re doing it, but spreads are so high that it’s become unsustainable.”

Bremmer on whether Germany is removing itself from the conversation in Europe:

“I would not go that far. I do think they are engaged in a very difficult negotiation…The fact that the Germans at this point are not yet prepared to accept the kind of economic fixes that are required does not tell as much about their ultimate predisposition. They have their own domestic constituencies they have to play with.  They also have very strong political constituencies across the euro zone that are acting in a very intractable way. We’ve seen some forms of German capitulation over the course of the past months…Who is to say that there will not be dramatically more capitulation when they’re actually forced to do it.”

Roubini on what matters most right now politically:

“All of it matters in the sense that we're kicking the can down the road. The Europeans do not want to make the decisions and there will be political elections in Germany, Italy and other parts of Europe. We have the U.S. presidential election and until then, we’re not going to do anything about our fiscal problem.  In China, there is a stall right now because of the leadership transition that happens once in a decade and important decisions about their growth model has to be done. The problem is that every part of the world is kicking down the road to 2013. At this time we’re reaching a point in which by next year, you could be in a scenario in which we hit a brick wall, and then euro zone breaks up, in the U.S. you have a fiscal cliff, in China the landing could be hard and in the Middle East you could have a war. That is a perfect storm.

Roubini on the complexity of the central banks response:

“Everyone is going to do more monetary easing…We live in a world in which the problems of the advanced economies are not problems of liquidity. Banks have plenty of liquidity. The problems are fundamental solvency. So just throwing money at it implies that the loss will continue to collapse and banks will hold extra money in the form of excess reserves. The credit mechanism is broken and there is no creation of growth in most advanced economies. So it doesn’t affect real economic activity.”

Roubini on Merkel saying euro bonds are “the wrong way” and whether she was speaking to European leaders or voters in Germany:

“She was talking to both of them. The trouble is if there is not going to be an agreement on some point on having e-bonds I think the situation in Europe is going to become disorderly. Italy and Spain were are doing massive fiscal adjustment, but their spreads are still very high… At some point the Germans will decide, do I take the credit risk of backstopping Spanish and Italian debt in exchange for some loss of national fiscal sovereignty by Italy and Spain in which case the euro zone has a chance to survive. Otherwise, this will become disorderly in the next few months.”

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Wed, 06/27/2012 - 15:59 | 2566153 Cult_of_Reason
Cult_of_Reason's picture

Officials Say Germany Becoming More Amenable Before Summit

"Despite the public resistance, senior officials involved in the closed-door deliberations said the German government was becoming more amenable to quick action and they were hopeful an agreement could be reached at the two-day summit.

The most likely plan, officials said, was to use the eurozone’s €440bn rescue fund to purchase Italian and Spanish bonds, but the officials cautioned that no deal had been reached last night. Such a programme would require new reform conditions for both countries, particularly if the fund purchased bonds directly at auction rather than on the open market.

Other ideas, including finding ways to funnel bailout funds to Spanish banks through special investment vehicles, were also being explored, as was removing seniority status for Spanish bailout loans, according to people familiar with the talks."

Wed, 06/27/2012 - 16:02 | 2566172 the not so migh...
the not so mighty maximiza's picture

"including finding ways to funnel bailout funds to Spanish banks through special investment vehicles.."  is that a midnight drive in an armored car?

Wed, 06/27/2012 - 16:14 | 2566201 The Big Ching-aso
The Big Ching-aso's picture



"...things together are getting worse."    

This is really late-breaking big news.  Nour-shit Roubini hits another one outta obvious park. Between throwing penthouse poontang parties and private art shows it's amazing he has time to throw us these phucking nuggets of galactic insight.

Wed, 06/27/2012 - 16:17 | 2566228 OttoMBMP
OttoMBMP's picture

And he thinks it is cool to ignore all legal, political and historical aspects.
He has a very narrow horizon. Sorry to say that.

Wed, 06/27/2012 - 16:19 | 2566240 nope-1004
nope-1004's picture

He said in 2009 that this is a "saukers rally".  LOL. 

Wed, 06/27/2012 - 16:27 | 2566272 Stackers
Stackers's picture

We're all doing to die !!!!!!!! AAAAAAAAAAaaaaaaaaaaaaahhhhhhhhh

Wed, 06/27/2012 - 16:35 | 2566297 The Big Ching-aso
The Big Ching-aso's picture



Don't count on it.   Count Chocula here's probably gonna live 4ever surrounded by rejuvenating babes like that. 

Wed, 06/27/2012 - 16:52 | 2566364 Rearranging Dec...
Rearranging Deckchairs's picture

Vitamin P the ultimate rejuvenator! LOL

Wed, 06/27/2012 - 17:37 | 2566527 ihedgemyhedges
ihedgemyhedges's picture

Roubini is right.  Reborn virgins won't satisfy anyone.  And I should know.  I'm married to one...............

Thu, 06/28/2012 - 02:43 | 2567489 Buck Johnson
Buck Johnson's picture

I thought that image was photoshopped, I guess he is getting ass.

Wed, 06/27/2012 - 16:09 | 2566204 iDealMeat
iDealMeat's picture

Hard to take this guy seriously.


Vagina Wall

Wed, 06/27/2012 - 16:36 | 2566305 TaxSlave
TaxSlave's picture

Hard to NOT take that seriously.


Wed, 06/27/2012 - 17:17 | 2566360 Frozen IcQb
Frozen IcQb's picture

Hard not looking at her seriously.

Wed, 06/27/2012 - 17:31 | 2566497 TWSceptic
TWSceptic's picture

Serious hard-on looking at her.

Wed, 06/27/2012 - 17:51 | 2566572 PhattyBuoy
PhattyBuoy's picture

Curious ... if Dr. Doom has a VagWall, then what does Krug have on his walls ... ?

Wed, 06/27/2012 - 18:06 | 2566602 geekgrrl
geekgrrl's picture

My guess is a super-magnified photo of Barney Frank's anus. Hedgeless Horseman posted it here a while back. Help me out here Hedgeless...

Thu, 06/28/2012 - 07:30 | 2567701 ZeroAvatar
ZeroAvatar's picture

Shit, spaghetti, corn flakes, you name it.....he'll throw anything against the wall to see if it will stick.

Wed, 06/27/2012 - 21:41 | 2567096 moonstears
moonstears's picture

Looks like the model for his vag wall had her clittoris removed and was suffering from ghonnoreeaha(sic). What's that a Camel's pussy? Where's Mr. Roubini from?

Wed, 06/27/2012 - 16:03 | 2566179 sunaJ
sunaJ's picture

"It’s getting worse, there’s already a sovereign debt crisis, a banking crisis, a balance of payment crisis, an economic crisis and all of those things together are getting worse."


All parts of the larger crisis of confidence.  Add a dash of rampant fraud and you have collective John Galt. 

Wed, 06/27/2012 - 16:04 | 2566180 HaroldWang
HaroldWang's picture

Of course they are! Are people really this naive to think that Germany would let this fall apart and throw everyone into a depression?? They'll do whatever it takes to keep it afloat for another 6 months, then start it all over again. But by that time, we'll be hitting yearly highs on SPX.

Wed, 06/27/2012 - 16:05 | 2566182 Snakeeyes
Snakeeyes's picture

I agree with Cult_of_Reason. Germany signals toughness, but wiill agree to something. What that something is .,,?


Wed, 06/27/2012 - 16:09 | 2566200 gojam
gojam's picture

I think you're wrong. I think they have decided to set Southern Europe adrift.

Read - Of Euro Bondage -

Wed, 06/27/2012 - 16:21 | 2566247 john39
john39's picture

that assumes that germany is under german control...   much like the united states, it is not.

Wed, 06/27/2012 - 16:31 | 2566268 gojam
gojam's picture

Control by whom then?

If any country is under 'control' Germany is. Don't get me wrong, it's in the Shit because of the open Euro liabilies, and hidden banking liabilities, it has already taken on board but it is still under 'control', if any democratic nation ever has been.

Wed, 06/27/2012 - 16:36 | 2566304 john39
john39's picture

international corporate/banking interests owe very little loyatly to the host countries.  Politicians are captured and work against the interest of the people in many cases.

Wed, 06/27/2012 - 16:51 | 2566335 gojam
gojam's picture

John, I take your point and it's a fair one.

But the corporate/banking interests are screwed anyway, or atleast they're going to take a big hit. Throwing a firewall around Germany, Switzerland, and the UK may be their last best hope, in Europe. The money is already drifting that way. The big money is already evacuating the danger zone. Even if you were correct and these interests control Germany, with so much at stake why would they risk everything on Germany propping up the Euro?

Ever thought that Germany is the perfect hedge ?

Edit: Perfect hedge is incorrect. I mean one of the few viable hedges left.

Wed, 06/27/2012 - 17:03 | 2566411 john39
john39's picture

hard to say what the plan is or was...  I think that collapse would be the perfect crisis that could get people to buy off on greater consolidation of financial control and power.  So much of this is just funny money anyway.  the key will be, who owns the real assets after things fall apart... and did they use paper money schemes to gain control over real assets?

Wed, 06/27/2012 - 17:13 | 2566445 gojam
gojam's picture

When push comes to shove, the only 'real' assets are vital natural resources.

Everything else can be nationalised, made obsolete, or requisitioned.

That is the very bottom line. 

Thu, 06/28/2012 - 04:21 | 2567552 marriedgeordie
marriedgeordie's picture

Yeah, like vital natural resources cannot be nationalized

Wed, 06/27/2012 - 16:19 | 2566187 OttoMBMP
OttoMBMP's picture

“... The trouble is if there is not going to be an agreement on some point on having e-bonds I think the situation in Europe is going to become disorderly. Italy and Spain were are doing massive fiscal adjustment, but their spreads are still very high… At some point the Germans will decide, do I take the credit risk of backstopping Spanish and Italian debt in exchange for some loss of national fiscal sovereignty by Italy and Spain in which case the euro zone has a chance to survive. Otherwise, this will become disorderly in the next few months.”

- Yes, Nouriel, and if you get your e-bonds, the situation will get disorderly some months or years later and the catastrophy will be much worse, because then, much more economic substance will have been consumed and much more savings and capital misallocated.

There is no easy way out. And I think, Nouriel, you know that. So, what game do you play here?

Wed, 06/27/2012 - 16:07 | 2566192 Quintus
Quintus's picture

Subordination of private bond holders renders this 'Solution' very risky and possibly worthless.

Wed, 06/27/2012 - 16:08 | 2566196 battle axe
battle axe's picture

Roubini has proven himself Right again and again....

Wed, 06/27/2012 - 16:01 | 2566165 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Yes, but did he say anything about gold?

Wed, 06/27/2012 - 16:17 | 2566231 TrillionDollarBoner
TrillionDollarBoner's picture

Last time he said gold could kiss goodbye to ever reaching $2000.

This time he says that next year will likely bring a perfect storm of global monetary easing, sovereign debt crises, defaults, and war.

How about that for cognitively dissonant?


Wed, 06/27/2012 - 16:03 | 2566173 williambanzai7
williambanzai7's picture


Wed, 06/27/2012 - 16:22 | 2566252 Aziz
Aziz's picture



Wed, 06/27/2012 - 16:38 | 2566308 Goldilocks
Goldilocks's picture

Aziz! Light!


The Fifth Element (Alech Taadi) (4:21)

Wed, 06/27/2012 - 16:04 | 2566178 Goldilocks
Goldilocks's picture


Free-Market Banking Technology fights the Intergalactic Monetary Mafia!         ( ZH !!! ) (28:03)

Gerald Celente on Old-Man Europe, Romney & Sons, and a Golden Summer (28:03)

Cyprus lands in Europe's "Bailout Crosshairs," as the BIS says "Hold the Presses!" (28:00)

Chris Martenson on Shadow Bank Runs and how Central Banks are Missing the Boat! (28:04)

Wed, 06/27/2012 - 16:09 | 2566202 MsCreant
MsCreant's picture

The Roub has not been a consistent playa' here. Why does he own the doom now? Why do we care when he was a mouth piece that supported the kick the can regime?

Folks can just be "wrong" and we can forgive them and welcome them back to the fold... BUT FUCK HIM. I don't care what he says now. He had it, abandoned it, and now he has religion again?

Wed, 06/27/2012 - 16:12 | 2566213 williambanzai7
williambanzai7's picture

My sentiment exactly.

Wed, 06/27/2012 - 16:21 | 2566248 OttoMBMP
OttoMBMP's picture

Yes, and if you look a little closer, he is still a can kicker.
What is an e-bond if not a big can kick?

Wed, 06/27/2012 - 18:42 | 2566699 blindman
blindman's picture

you answered your own rhetorical question.

Wed, 06/27/2012 - 18:46 | 2566712 blindman
blindman's picture

speaking of "can kicking", i liked the
sisyphean can shouldering image quite
a bit. the can isn't kicked, it is shouldered,
as you depicted. the 1% kick it, the rest carry it.

Wed, 06/27/2012 - 16:26 | 2566222 bigdumbnugly
bigdumbnugly's picture

lately the roub has been detected in more positions than a rogue electron.

but i think he has ultimately come to the conclusion that he has more notoriety as dr. doom than he does as dr. lukewarm.

Wed, 06/27/2012 - 18:08 | 2566610 grid-b-gone
grid-b-gone's picture

Carnac ponders the sealed envelope...

"John Corzine...Paul Reubens...Hugh Grant"

The straight man assistant dutifully repeats the predictive answer. The pregnant pause ensues as the envelope is ripped at one end and air blown in to expose the edge of the answer sheet. The sheet is pulled out and unfolded....

"Name a banker, a wanker, and a skanker discovered in a wrong position."

Wed, 06/27/2012 - 20:10 | 2566898 geekgrrl
geekgrrl's picture

I appreciate the sentiment, but Johnny Carson would have come up with a much better punchline.

Wed, 06/27/2012 - 18:09 | 2566611 geekgrrl
geekgrrl's picture

+1 for the rogue electron metaphor

Wed, 06/27/2012 - 22:37 | 2567179 MsCreant
MsCreant's picture

You need to be around here more grrl. I like ur posts. Always spot on.

Thu, 06/28/2012 - 01:25 | 2567441 geekgrrl
geekgrrl's picture

Thanks MsCreant. I always enjoy reading your posts as well...


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