Schaeuble Disappoints On Geithner's Uber-Levered EFSF Plan

Tyler Durden's picture

Just Bloomberg headlines for now but equities and credit giving some back and EUR selling off modestly as German finmin Schaeuble comments in an N-TV interview:





Source: Bloomberg

ES is exactly at VWAP and IG/HY spreads are widening well off their intraday tights.

UPDATE: Translation by Peter Tchir of TF Market Advisors

No intention to increase EFSF - translation - EFSF isn't growing


Employed in "efficient" way - translation - defending countries that can be defended and not throwing more money after bad.


Good to have ESM fund earlier - translation -  a rescue where countries other than Germany and France put up at least a little money.  One where Italy contributes at least a little, rather than just takes

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oogs66's picture

maybe he read ZH today and decided the plan was stupid?

Ethics Gradient's picture

The only sensible thing to do is pull the plug, cut out the dead wood and let markets look after markets and governments look after their own people.

There is no incremental improvement solution where growth sorts everything out. Whilst everything is centrally planned, growth is impossible.

trav7777's picture

growth isn't possible past peak oil.  You were warned

spiral_eyes's picture

Trav you can bioengineer diesel for $30 a barrel. Why isn't it being done now? Cause pumping oil costs much less than that. OPEC is a cartel, and you are helping to enrich some of the most barbarous dictators in the world by repeating their insidious lie about Peak Oil.

Back on topic:

Even if an expanded EFSF can be brought together to successfully bail out Greece and recapitalise European banks who have to write down significant chunks of Greek debt, there is no guarantee whatever that any of these measures will address the underlying fracture in European budgeting. Namely, that European governments are spending like they are monetarily sovereign — in other words, behaving as if they can print as much money as they want to cover debts — when they are not.

Seems to me like TPTB have decided destroying the Euro in its current form will be more profitable to them than saving it. 




kito's picture

i dunno trav, gas just dropped to 2.39 by me. im not seeing this peak oil. gas has been dropping over the past 6 months and is quite cheap, and lo and behold, no growth!!!! gee!!!

unununium's picture

Have you heard of Mish?  You might like it over there.

Newsboy's picture

Oil production peaks (2005-2006)

Price of fuel goes up as strong economy demands more than can be pumped. (little production peak 8/2008)

Economy crashes from fuel expense.

Fuel price drops.

Economy tries to expand again, but is weaker.

Fuel price rises.

Economy dumps again, but at a lower output and lower fuel price.

Deflationary spiral ensues.

Peak oil crashes the economy, without oil price going higher and higher.

Stoneleigh at The Automatic Earth Blogspot has been saying exactly this for years, and is highly qualified to say it.

Newsboy's picture

Fluctuations are possible. Growth is impossible.

Decline can be smart or stupid/destructive.

What's our track record?

Awakening after the fact and eating each other.

He_Who Carried The Sun's picture

There is no back and forth at all.

There is a US wishlist and a EU (namely Weidmann and Schaeuble) standing firm against  any attempt to turn the Euro in to some sort of banana.

The EFSF will NOT get a banking license in order to inflate its firepower through leveraging the EFSF fund via the ECB.

Before that happens, the EU will break up and the Germans will leave.

Instead it will be as Merkel wants it: Greece sorrounded by a firewall and a fund to protect the banking system in case of the inevitable default and 50% haircut. The rest is just background noise.

So Mr. Geithner: stop trying to confuse everybody and start cleaning up the US' mess...

Growyourownfood's picture

It is interesting though isn't it:

If they expand the EFSF, the Euro tanks due to the massive devaluation it implies. If they don't expand it then the Euro tanks due to rolling bankruptcies. So either way short euro seems like a pretty good palce to be??

bigdumbnugly's picture

yes, either way.  therefore be careful.

lately that's been the bait of choice...

Mactheknife's picture

There will be some Germans who will be dragged kicking and screaming but ultimately they WILL expand the EFSF. Here's a question...when the Fed Starts buying all those long bonds off the primary dealers, where do you think that 400bil is going ti go?

Growyourownfood's picture

I don't know, where do you think its going to go?

He_Who Carried The Sun's picture

Because those who think the obvious is going to happen will be hit by the Bernank.

The Euro is going to rise as soon as they stop talking and do something about Greece.

The cratering is now...

It will then go passed 1:50 which is why GoldmanS is fighting this as all that remains will be a further downgrade of the US which is the one and only true Banana-Republic! Mark my words!


Growyourownfood's picture

Do what about Greece? Print a whole bunch of Euros, setting the precedent that indicating that europe will bail out all of its sovereigns? Will that make the Euro stronger?

scatterbrains's picture

I wonder if it's possible to discern who's holding what long/short  cds based on these back and forth statements and then get a sense of where the strong hand is and roll with that ?

Caviar Emptor's picture

The iBank/Eurobank song (Apologies to The Rolling Stones) to the Euro Ministers:


If you bail me out
If you bail me out I'll never stop
If you bail me out
If you bail me out I'll never stop
I've been running hot
You got me ticking gonna blow my top
If you bail me out
If you bail me out I'll never stop


You make a broke bank cry
Ride like the wind at double speed
I'll take stocks places that you've never, never seen
Bail me out!
Love the day when we will never stop, never stop
Never stop, never stop
Tough me up
Never stop, never stop, never stop

Yo, yo! You make a broke bank cry
Yo, Yo! You make a dead bank come
Yo, Yo! You make a dead bank come



disabledvet's picture

More like "take me out to the ballpark." and throw in a hot dog with those peanuts and cracker jacks ya cheap bastard! Obviously there is no treasury department in Europe...nor will there ever be. Move along.

GeneMarchbanks's picture

Fight! Fight! Fight! No one ever gets slapped. More violence please!

Cdad's picture

News Flash...BlowHorn [CNBC]...Steve Grasso [floor trader]....

Calling out support marks on the S&P...but more importantly, reminds everyone this is quarter end.

And with that mention, I think we have hit a record number of mentions of entirely false and empty equity market catalysts in the last thirty days.

The desperation of market participants is now hitting a fevered pitch.  Desperation is breaking out....

Cdad's picture

Oops...add another dumb ass, banker inspired reason to buy equities:  "its the only place left to go."


Dear FCC,

Seeing as criminal syndicate Wall Street bankers have taken over the BlowHorn, which has released a torrent of lies specifically for the purpose of deceiving the population the network is supposed to defend, please revoke the BlowHorn's license to broadcast "financial news."  

Thank you.


Waffen's picture

BOOM! goes the Dynamite!!!!



welll not really

X.inf.capt's picture


when i wrote a comment on 'disapointment with the fed',  last weds. on how people locally,here were dumping phyiscal at $39, you were 1of 3 people who didnt nail me to a cross. just wanted to say...


from what i gathered here on the hedge, alot of big money knew this was comin' down the pike... ya' think?

oh well, this is lookin' scary, but im going to BTFD. i think ill lay off the dimes, and graduate to quarters...

keep your head down, and ill see ya' on the beach....

Waffen's picture

Yes I feel bad.. you got hammered pretty badly for simply pointing out an observation you had made.

unfortunately there are many trolls and when real people come along with real information that doesnt fit into the Bull Story, well they get thrown out with the bath water.

IMO, you called it, but no one was going to beleive it when they dont know you have any credibility.  I ask that you please provide any future insight you have and the next time your words should have much more weight.


X.inf.capt's picture

i shall, WAFFEN, and thank you again for having my back.

well, off to the COIN DEALER.... wasnt an observation, i just said what i saw and heard, im way too new at this to give insight....

Rockfish's picture


Buffet buy back. Isn't that the same as the fed repo action?


Dick Darlington's picture

Same message was given today by Holland and Finland. So the kabuki theathre continues. The insolvent junkies, whether gubbermints or banks, keep wanting more and more for free while the ones still hanging there on their own (ie Germany and a few smaller countries) don't want to saddle their own electorates with trillions in someone elses debts. Grow up and grow a pair, just break the eurozone. It'll never work, never.

Jim in MN's picture

Insert pig with wings and lipstick here


"Ceci n'est pas une EFSF"

kito's picture

very bearish for pms my friends. very bearish. keynes does not rule the day in europe.

Sophist Economicus's picture

keynes does not rule the day in europe.

Don't know whether that's true or not, I'll let their action do the talking over the next 6 months.    However, even if it were true, PMs in Euros might stabilize, but PMs in Dollars are still primed....


qussl3's picture

Bearish in EUR and some EM currencies.

But if this succesfully prevents an implosion in the european banks, then the USD is dead.

PMs in USD will run riot as CB allocate away from the increasingly irrelevant USD into EUR, Yen (crazy as it sounds), and likely some PMs.

If the ROW can stop a banking crisis without printing the USD is fucked.

unununium's picture

Since when does rejecting an idea equate to actually having a plan?

This idea is just printing by another name anyway.

Cone of Uncertainty's picture

We have to use logic here.

The ECB only has one tool left.

Human nature tells us that they will not sit by and watch shit implode without turning on the printing press.

This is a very bullish move for PM's, since these douches will capitulate in the end hands fucking down.

GeneMarchbanks's picture

Cannn't stop De... De... De... leverging.

disabledvet's picture

Human nature tells us that's exactly what they will do.

Peter K's picture

Does anyone seriously think that the French will actually pay in good funds?  With all those war reparations..scratch last... make that population of those backward inefficient farmers:)

gnomon's picture

Wrong!  Geithner will shove trillions of "swap-dollars" down the gullets of the recalcitrants to make them go along, (if he has to). 


Make no mistake they will not allow the balloon to collapse, even though it may deflate.

NotApplicable's picture

Looking in Google images, I see he relies on the old wrestling move "The Claw" in order to get his point across.

GIS for Schaeuble

Socrate's picture

They WILL increase the EFSF as soon as Italy knocks on their door begging for help. Italian 10Y bonds are slowly approaching the critical limit of 7% after which Italy will start playing the next domino :)

Germany and France will kill innocent people just to solve the insolvable (zEURo). Europe was a very interesting place before this crap of currency has been adopted by the strongest European economies.

kito's picture

fat chance they will print. they are not going to ruin the currency for a bunch of chronic spendthrifts. at the end of the day, the strong will protect themselves while the piigs get roasted on a spit. and what will emerge is a strong euro-- and then the world will turn their head towards the u.s. and stare with disgust...........ohhh boy......then.....its....really..... gonna....get......ugly

Socrate's picture

+1 for your optimism on the capacity of Europe to solve its issues, though I am not such an optimist myself, no matter that I am living in Europe. It tooks ages for European "leaders" to take decisions and each and any of their decisions are nothing but promisses till now.

Dick Darlington's picture

OT: Total (FP FP) CFO says the firm has altered its strategy on bank deposits, able to access Bank of France in case of crisis Mon, 18:38 26-09-2011

So it's becoming "new normal" that companies skip the insolvent banks and go straight to central printer?

adr's picture


How many times can this rumor push up the stock market. THERE IS NO EURO FIX!!!!! Get over it and collapse already.

Did anyone figure out what caused the 100 point Dow flash jump this morning? No volume than 13 million shares in about one second. All while the Nasdaq was going down. Once again flash jumps are not a problem only flash crashes.

The really weird fractal pattern is back in the Dow and Nasdaq again after appearing a few weeks ago when everyone thought the market would drop and somehow it jumped. The pattern started before at 2:00 and this time started at 12:30. There are weird gyrations of a couple points that last fifteen minutes and then there is either a sharp drop or a sharp rise. Then the pattern repeats for fifteen minutes again later on. When there is no volume the computer trades come into full view.

fdisk's picture

Dude, NASDAQ is red. There is fix, EUR should be printed and devaluated,

and that will do it, but Europeans are too slow, faster they start, lesser

it's going to cost them.. If they don't know how to do it, they need to look

into Zimbabwe experience :)

Edward Fiatski's picture

Via Ransquawk:


"Total (FP FP) CFO says the firm has altered its strategy on bank deposits, able to access Bank of France in case of crisis"


Oh, dear.

Atomizer's picture

Pg 5 

(10) Like the IMF, the ESM will provide financial assistance to an ESM Member when its regular access to market financing is impaired. Reflecting this, Heads of State or Government have stated that the ESM will enjoy preferred creditor status in a similar fashion to IMF, while accepting preferred creditor status of the IMF over the ESM. This status shall be effective as of 1 July 2013. In the unlikely event of ESM financial assistance following a European financial assistance programme existing at the time of the signature of this Treaty, ESM will enjoy the same seniority as all other loans and obligations of the beneficiary ESM Member, with the exception of the IMF loans.

fdisk's picture


What this guy been smoking? Who's gonna bail them out then? Geithner?