Step-By-Step: How To Fix Europe

Tyler Durden's picture

via Mark Grant , author of Out of the Box,

It’s these changes in latitudes, changes in attitudes

Nothing remains quite the same

With all of our running and all of our cunning

If we couldn’t laugh we would all go insane
            -Jimmy Buffet, Changes in Attitudes, Changes in Latitudes
As we prepare to push off from Green Turtle Cay tomorrow morning and “Wishes Granted” heads back to Fort Lauderdale I look over the ocean and wonder what has changed since I began my journey. There is nothing quite like “messing around on boats” or those moments in the early morning before the sun tips over the horizon to consider the financial seas. After almost four decades of messing about on Wall Street I visualize the times and tides from a long perspective of having ridden the waves of both calm and storm. With record low Treasury yields it is clear that the bond markets think we are about to embark upon a difficult journey while the equity markets are still regaling in the quarters past and concentrated on the technicals of the rigging. The bond markets have read the charts and looked at the weather ahead more correctly I fear and the length of our European journey changes nothing about the difficulty of the upcoming passage.
I have been asked so many times and by so many people over the last couple of years how to fix Europe that the question is now commonplace in my thinking. Generally I am not given the time in the media to answer the question fully as they want you to explain the silver bullet in a five minute sound bite. Neither my Kansas City brain nor my Kansas City mouth can move words onto the airwaves with such rapidity. I have now had some time to ponder the concept and consequences of what has been asked and this morning I will give you the short version.
Fixing Europe-Step I
Europe has to stop lying and start telling the truth in the first instance. The data has to be real and accurate and not shaded so that investors can regain some confidence that there is some reality to the numbers presented. Europe has been much too cute in its presentation about almost everything and this needs to stop and they should proclaim a new day of openness and honesty and stop trying to fool everyone and mask the truth which has been the manner in which they have done business.
Fixing Europe-Step II
Europe needs to specifically address the problems of their banks. The banks should be shrunk so that they do not overcome the nations in Europe. The European banks are currently three times the size of the EU-17 and that position is so dangerous and so fraught with peril that it must be changed as a matter of some urgency. All of the banks should also be overseen by one authority and the regulator should be independent, tough and unforgiving in oversight and the regulations must be applicable all across Europe with absolutely no variation. No sovereign central bank should have any authority at all and the ECB should not be the regulator as it is much too political a position in Europe which is a totally different structure than the United States. One European Central Bank for fiscal and economic policy and one European regulator to police the accuracy of the data and the amount of leverage and adequacy of capital and collateral that does not waiver from one nation to the next.
Fixing Europe-Step III
There would have to be one Department of the Treasury. The national Parliaments could present budgets but the one European regulator would have to decide and have the ability to implement. Every nation would have to submit and there could be no going back.
Fixing Europe-Step IV
The people in Brussels would have to be elected by the citizens in Europe. All Parliamentary appointments would have to be stopped. They would need some kind of Congress and Senate solution but the people elected would have to be direct from the people so that all citizens had representation.
Fixing Europe-Step V
The judicial system would have to be European. From the appellate courts up everything would have to go to the European courts and all of the national judiciaries would have to be reorganized.
Fixing Europe-Step VI
Europe would have to become a country. There could be no more sovereignty for all kinds of issues and political constructs. It would have to be the country of Europe and the nations would have to become like States in America. “One nation under God and indivisible.”
The Costs of Fixing Europe
The main issues bended about in a number of significant ways would be the total and uncompromising loss of all of the nations’ sovereign status. There would be virtually no more Spain, France, Italy et al. Every nation and their cost of funding and their standard of living would have to merge at some average or mean.
So I ask Europe; are you prepared for this? Do you want this? Are you willing to pay the price for this because if you are not then I suggest you end the charade and protect your own interests before you fall down the rabbit hole that you have created by your own political and economic deceit!

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GetZeeGold's picture



They shoot horses....don't they?


idea_hamster's picture

In fact, all they have to do is stop saying "There is no default in the Eurozone."

Once they let go of the idea that all countries are equally good credit risks, most of these issues go away.

(Of course, that also means that most of the major Euro-area banks "go away," at least as we know them.)

GetZeeGold's picture



OK fine. I won't shoot the horse. But I'll be damned if I'm going to drag it any farther.


If you feel like doing it.....go nuts.


Ghordius's picture

very good idea, hamster - I believe I heard once that letting defaults happen was called capitalism

but we are not yet there


Dear Mark Grant, of "Out of the Box"

Thanks, but no, thanks. And "fix" is not a nice word, it makes me think about how Wall Street's GS "fixed" the Greek books, or how junkies need a "fix". Nevertheless, point by point:


I. We do have some politicians that admit they have to lie, from time to time - promply ridiculed from an AngloAmerican point of view that seem to imply that lying has to be consistent & professional. Nevertheless, the truth is the one that "investors" don't want to hear: it will take time. See Fiscal Compact. And, of course, it all depends what America does, in the meantime...


II. Old blabla about the "proper" banking leverage - you forget that the composition of the balance sheets of our banking systems is different - as also the way the real economy is serviced (more direct loans, less bonds and IPOs). Oh, and the assets on which the whole shebang is based are - how to put this delicately - less crappy than those of comparable American banks. Less (we are not as rich as the US) but more solid collateral. Is a bridge that has only two pylons on rock is worse than sixteen pylons on quicksand? We will see...


III. Nice. So we have to stop being something like a Confederation and become a Federation like the US so that you feel less lonely? No, thanks, we cherish our sovereignty. Anyway, this point is being addressed by the Fiscal Compact. See here:


IV. Usual propaganda. We have a directly elected EU Parliament. Our "Senate" is already there, it's the European Council (not tremendously different from how the US Senate was before 1913). It fits our Confederate model, thank you (note that we usually don't use this word so that you are not offended). It's just your media that calls all the Council meetings "Summits" (perhaps in order to hide how the EU functions, which is complicated enough?) that you did not even notice we have it. See here And no, it has to be this way, because it's the national Parliaments that have to be able to call the shots.


We don't want a meaningless elected Presidency that leaves everybody powerless and unsatisfied. Pls tell me how well does your system work? When did you lastly vote for a "good" President?


V. ehem… what about sovereignty? What exacly is "not functioning" in our judicial systems? ARE YOU ASKING FOR A BLOODY SYSTEM LIKE YOURS, THAT INCARCERATES MILLIONS? No thanks, we are happy with a prison pop of 0.1% of the total. Oh, you mean something that makes your job easier?


VI. Finally: become like us, otherwise we would have to do some soulsearching that would be too painful…


38 years at Wall Street and you are still thinking that WE the EU caused the current issues? I see, I see, you started in 1974, you don't even remember how we came to have the world we have now… I give you a small hint: what is in the basement of the NY-FED? And to whom does it belong?



carambar's picture

good answer Ghordius.

Most on ZH  have no historical perspective. don't know how europe was built.

tend to project their wiew of the US system as a european solution.

Ignore that european people are far far from being overloaded by debt, to the contrary private savings can balance government defict

unlike the US.

Again, the current crisis in Europe is unfortunatly more severe than it should have been without the billion European banks lost in the US realestate disaster.

What amaze me is the stupidity of all these advice by Tyler. as if every solution could be implemented in a day.

Time is needed. if Tyler doesnt understand this, he shouldnt write ... unless he doesnt believe in what he write.

Gief Gold Plox's picture

This part "The data has to be real and accurate and not shaded so that investors can regain some confidence that there is some reality to the numbers presented." on the CDS-gate day is quite ironic.

Croatian Patriot's picture

Fixing Europe-Step VII


Gief Gold Plox's picture

Wouldn't it be quicker and easier if that was simply "Step I"?

Peter Pan's picture

This article is a load of hogwash. If real and accurate data is the first step we may as well stop there because no government is capable or willing of either producing or presenting such clarity and truthfulness in its data.


i-dog's picture

There is a massive propaganda campaign now underway to remove confidence in national governments and private banks. We are being shepherded into accepting a single "fair" global central government (with just some decentralisation to central 'unions' in Europe, America, the Pacific and Africa).

The concept that farmers in Iowa, or inventors in Boston, should be able to raise local finance and employ local labour to produce locally distinctive products for trade with other communities is being thrown out the window in favour of Central Planning on a global scale.

And the parasites will love it and vote for it! After all, they don't care where the free shit comes from -- and don't want to be bothered with details -- so long as they continue to get free shit distributed by somebody else in some central location!!

The idea of getting rid of failed centralised planning and bloated regional governments is never discussed!

The NWO is running behind schedule due to the EU falling apart at the seams. So expect the propaganda volume to be turned up in the MSM and by contributors to blogs like this one.

DutchDude's picture

My guess is that step II is already too much for most European people; therefore the Eurozone should break up asap!

If the politicians force these steps without a democratic mandate; there will be riots or worse!

q99x2's picture

Max Keiser had a dude on last night that told it like it is. London made it illegal to ever arrest a banker. They have made them royalty that can wreck the world if it gets in their way of stealing.

Game Over.

GeneMarchbanks's picture

Vox nihili extraordinaire Grant releases yet another one of his diaphanous 'articles' about a topic that he [somewhat strangely] cannot seem to abandon in light of new, perhaps way more relevant, scandals.


AUD's picture

But he's neck deep in US Treasuries, about to drown in his 'profits'. You just can't have to much money.

ghenny's picture

The catastrophizing hyperbole in all the articles and comments on this site is not very convincing or useful.  It obscures and detracts from many good points made here.  Things are rarely black or white.  Most people and countries muddle through imperfectly.  Besides, we don't know what perfect is anyway.  Solutions in the short term can be bad for the medium term and visa versa.  Lets have a little more humility and openess to self doubt and a little more thoughtful discussion about why people do what they do without always assuming they are stupid, misguided or corrupt.  You will get more attention and greater respect if you do this.

Waterfallsparkles's picture

The New World Order is failing, showing huge cracks.

Very much like Humpty Dumpty sat on a wall,

Humpty Dumpty had a great fall

all the Kings Horses and all the Kings Men,

could not put Humpty together again.

DFCtomm's picture

It's not hard to figure out what's wrong with Europe, and us for that matter. We spend more than we take in. It's that simple, but what's not simple is figuring a way to pull the hog off the trough without losing a hand.

dumbfound's picture

If that is the solution for Europe to come like the US then how do we fix the US by breaking up, because were not in any great shape if not worse.


AnAnonymous's picture

That is different.

Europe can fix the issue by becoming more like the US because they are not like the US already.

For the US, the solution envisioned by Europe no longer exists. The US of A implemented it and keep pushing at the wheel.

It is like being young and old, maturing and stuff.

When you are immature, you might solve certain issues brought by immaturity by becoming mature.

But if you convey the issues of immaturity in the maturity stage, you can no longer hope to solve the immaturity issues by becoming mature. Because you are already mature.

US citizens try to look for symetry most of the times.

But Europe and US situation in this regard is not symetric.

forexskin's picture

what depth, what brilliance...

if i had your level of insight, i would...















ask for a bigger pot and some fertilizer

Peter K's picture

So there is no stregth in diversity? They all have to be Europeans. What rubbish :(

AnAnonymous's picture

There might be strength in diversity. At least for natural selection.

But US citizenism has been a very efficient agent in diminishing diversity.

Usually, what US citizens call diversity is the diversity they fail to reduce, to destroy.

US citizenism strives for uniformity.

GeneMarchbanks's picture

US citizenism strives for uniformity.

Uniformity results from democracy, or to be precise from the misperceived notion of Greek demokratia which actually fostered individuality, speaking in a strictly Antiquity Greek sense of the word.

What you write is true nonetheless, its roots are in modern Western "democracies" not exclusively a "US citizen" problem.

zero19451945's picture

US Bond market is rigged. Using it as an indicator for anything is foolish.

TK69's picture


How to fix Europe and the world for that matter.

1) 100% banking reserves so that banks cannot loan out more money than they have

2) contractual ownership rights to depositors so that banks cannot speculate with other peoples money

3) Make loans intermediaries for those who want to lend there money - so each loan is tied to a direct deposit.

The rests will fall in place.

It really is that simple and it would change the world overnight.  Of course it would be the end of the state as we know it.  Why?  Because Central run economies, especially with corporate and social welfare spending and ones with aa large military cannot support themselves and thus cannot exist without debasing the money.

But economics will eventually create versions of these ideas in time. The problem is systemic.  And things that would not otherwise exist will not after the great default occurs.

johnQpublic's picture

fixing europe will require a set of tools nobody on the planet knows how to use

Ar-Pharazôn's picture

nothing you said will happen. useless article

Waterfallsparkles's picture

I do not think that there is any way to FIX Europe.  Unless they take away every Countrys Sovernty.  I do not believe that will happen.

I do not think that Germany will give up all of their Economic strength to support all of the weak Countries forever.

Very much like all of the Middle Class supporting more and more people on Welfare.  Soon, there is just not enough Money.

Vincent Vega's picture

I think the author must first define what is meant by "fix." For the sake of argument let's say all the steps he outlines are implemented. What exactly does that "fix?"

Doubleguns's picture

For the Europeans thats not a solution. Its a nightmare. Their egos will never go for it.

guiriduro's picture

Europe shouldn't exist for investors - its precisely the over-importance assigned to capital (being just a stock of freely printable money) that is the problem.  Not that stored wealth has no value or that european institutions are perfect - they're not. But until the eurozone is restructured with the primacy of human development, the social contract and maximised employment of labour as the fundamental principles (capital reinvestment as secondary and derivative), then there's no single europe that most workers would choose to be a member of.  period.

AUD's picture

The answer to your conundrum is simple. The quality of capital has to be kept to a standard. Really only one thing has the unaltering quality required for a standard - gold.

Certainly not the obligations of government & their central banking arm.

eigenvalue's picture

I have some much simpler solutions:

1. Fire 50% of the civil servants

2. Shut down all the zombie banks

3. Sue all the banksters

4. Cut all the social benefits by half

5. NO fiscal deficit is allowed from now on. 

4exNinja's picture

Nice solution...hurts the poor the most. Sounds totally fair (if you're a moron). 

eigenvalue's picture

Yeah, in your book, civil servants and banksters are the "poor" people.

Nachdenken's picture

Just the 1. would be a great start.

If fiscal deficits are not allowed, social benefits go as well.

These solutions are simple, not realisable.

aleph0's picture

@Mark - STEP IV - STOP

"The people in Brussels would have to be elected by the citizens in Europe."

... Never going to happen .... and should habe been STEP III anyway. 

From what I hear, the Germans & Brits - at least ! - are sick & tired of the corruption in Brussels , let alone increasing their dictatorial powers.
German Stern TV did a long-running report on the corruption in Brussels a few years ago.
Staggering to say the least  ... and that was probably just the tip of the iceberg.

apberusdisvet's picture

The Rothschild et al totalitarian agenda is on hold at the moment in Europe but is doing quite well in the US; ObamHillary are successfully ceding our sovereignty to the UN, and the Bill of Rights abrogation has been very insidiously and incrementally completed.

4exNinja's picture

Happy Switzerland's not part of Europe...

Nachdenken's picture

Step I is mythical - Which nation would fulfill this ? Truth is terribly subjective anyway.  Each of us has his/her own view of truth. 

Step II is generic - Applies to every investment and merchant banking operation worldwide.

So lets stop there, for the rest builds on the premise that I and II will happen.

The failure of the Euro is the failure of the European Union as it now is. 

The EU is a bureaucratic construction.  Which bureaucracy has ever been dismantled or dumped?  Do post a couple of examples.

ZH presents in its content a valid objection to the present concept of money - now the measure of all things.  If the unit of measurement is faulty, the readings are wrong, reactions based on those readings are then equally wrong.




dcb's picture

with operation twist and the endlss writing puts by the fed, I think the bond makets are as fucked up as the equity markets are as well. a year ago I could trade tbt, tlt for a proxy to the market, and it was (tlt) that I used t to top time april last year. this year yeilds never rose with the market, tbt became useless.

I mean we had the highest yearly oil price on record, and yelds didn't rise to react to inflation,

my signal is a sorty of oil pice, yelid for inflation hybrid and past charts

WallowaMountainMan's picture

"The banks should be shrunk so that they do not overcome the nations in Europe."

our banks or theirs? hmmm....

instigate the fall of the euro and make trillions? jpm, g/s, citi, bac must have that game plan ready to deploy... don't they? isn't that the great play of all time? bursting the bubble called the euro?

New American Revolution's picture

Isn't this kind of what Napoleon tried to do, sans the public elections?

Joe A's picture

Step VII: never ever again buy toxic US MBS and US bonds.

Step VIII: buy your oil in Euro, not Dollar.

Step IX: arm yourself to teeth with WMD and point them at everybody else.

Nussi34's picture

Step 1: Bomb Greece!

MaAncheNo's picture

EU will go on in the process of integration at increased speed but it will always be different than the USA even when there will be more cultural omogeneity (not because of hate vs cultural differences but because of a natural process taking decades).

cultural differences are a richness, it's foolish nationalism that it's an old recipe for failure, conflict and ideological nightmares. also, ceding a part of the sovereignity, those parts that are best governed at a bigger level in the world scene, a european level, doesn't mean you will cede all of your sovereignity. it can't happen in europe, it won't happen.

we europeans will construct our european federation the way we like it and taking care of our common interests, not of others. there will still be spain, germany, france etc. etc. with their cultural specifity for a lot of time after the political union will be completed.