The Truth Behind Europe's (€1.7 Trillion) "Triangle Of Terror"

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Fri, 10/21/2011 - 12:36 | 1797458 jarboejl
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Hey I drew that first graph (something close to it anyway) on my whiteboard and showed it to my friend who's a Financial Advisor.  He didn't get it...

Fri, 10/21/2011 - 13:02 | 1797552 spiral_eyes
spiral_eyes's picture

The real problem is an interconnected system based on debt-derived currency where a small amount of deflation, a few bank failures, or a small sovereign failure can all lead to collapse.

A system vulnerable to small parts of it collapsing will ultimately be destroyed by collapse.

Fri, 10/21/2011 - 13:04 | 1797563 jarboejl
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Fri, 10/21/2011 - 13:42 | 1797725 Ahmeexnal
Ahmeexnal's picture

Let them eat escargot!!

Fri, 10/21/2011 - 17:25 | 1798641 Apeman
Apeman's picture

Nein, bratwurst!!

Fri, 10/21/2011 - 12:36 | 1797460 jdelano
jdelano's picture

Thank you.  How can so many intelligent people choose to ignore this knowing that the short term gain of doing so will lead to long term...apocalypse?

Fri, 10/21/2011 - 12:49 | 1797493 Unprepared
Unprepared's picture

1.7 Trillion is a drop in the bucket in the global Overnight repo market. They would have no problem rolling it over.


Fri, 10/21/2011 - 13:31 | 1797670 LawsofPhysics
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The same way the have for the last 100 years.  Hedge accordingly.

Fri, 10/21/2011 - 15:36 | 1798247 mac768
mac768's picture

the laws of physics are obviously overturned if one looks at the Euro making 200+ pips in less than 48 hours?

maybe they have used CERN to reverse the laws of Newton

Fri, 10/21/2011 - 12:36 | 1797463 Ahmeexnal
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France about to demand Germany to pay up compensation for all past offences.

Fri, 10/21/2011 - 12:50 | 1797497 tiger7905
tiger7905's picture

Some great analysis from Stratfor on the European mess...

Fri, 10/21/2011 - 12:39 | 1797467 buzzsaw99
buzzsaw99's picture

As long as the billionaires prosper everything will be fine.

Fri, 10/21/2011 - 12:50 | 1797499 Quixotic_Not
Quixotic_Not's picture

True, and as long as the billionaires are protected by the USofA, nothing will change...

Fri, 10/21/2011 - 12:53 | 1797517 buzzsaw99
buzzsaw99's picture

the poor must become poorer, the rich must become richer. that is the order of things.

Fri, 10/21/2011 - 13:00 | 1797538 Quixotic_Not
Quixotic_Not's picture

As long as AMERICANS consent to it, you are correct...

Keep voting for the (D) & (R) Free Crap Empire™, keep helping the billionaires.

Fri, 10/21/2011 - 13:26 | 1797639 Withdrawn Sanction
Withdrawn Sanction's picture

"As long as AMERICANS consent to it..."

Correct. And correct, that the D vs R (or right vs left) is an illusion. Meet the new boss, same as the old boss.

Stop only encourages them. Withdraw your Sanction. They need your consent. Dont give it to them. Your voluntary consent salves a guilty conscience...and yes, some do feel guilt...properly so. Your consent also legitimates the outcome. Dont give it to them.

What if they held an election and no one showed up? But but that'd leave the process open to the special pleaders, the charlatans, and the looters....yes, and? That's exactly different from the present situation how? For chrissake, stop voting.

Fri, 10/21/2011 - 13:41 | 1797718 LawsofPhysics
LawsofPhysics's picture

Likewise, stop paying taxes, close all bank accounts and change all fiat in physical money.  Let me know when everyone starts doing this.


In additional the Americans, you might want to add the Chinese to people being "forced" to consent, of course they come to America and consent anyway.

Fri, 10/21/2011 - 12:54 | 1797526 Alvaro de Esteban
Alvaro de Esteban's picture

And that is the reality.

I know some wealthy families in Spain & Italy that is documented that they were rich 2.000 years ago during the times of the Roman Empire, and no war, empire falling, plague, natural catastrophe, revolution or economic disater have changed that 

Fri, 10/21/2011 - 13:00 | 1797551 Unprepared
Unprepared's picture

Those SOB won't stop until sovereign risk = 99% of total risk and all asset beta's ~ 1.

Welcome to risk commoditization, bitcheeez

"You can't run, you can't hide

No surprise, close your eyes

Come with me"

Fri, 10/21/2011 - 12:44 | 1797476 Randall Cabot
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"There is nothing in this earnings season so far that supports a U.S. recession " said Michael Murphy, managing partner at hedge fund Rosecliff Capital. "Although the European headlines are making for a wild ride, lets remember the market is cyclical and this European financial crisis will pass. We are a lot closer to the end than we are to the beginning."


Fri, 10/21/2011 - 12:47 | 1797484 Quintus
Quintus's picture

I pity the fool who has money under management with these clowns.

Fri, 10/21/2011 - 14:29 | 1797925 AcidRastaHead
AcidRastaHead's picture

Is that you, Mr. T?

Fri, 10/21/2011 - 15:47 | 1798290 CharlieSDT
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I can't believe how retarded that CNBC article is.  "Nothing to see here, folks.  Earnings beat by a couple cents, never mind the collapse of the banking system of 1/3rd of the world, or the unemployment, housing crash, or trillion dollar college debt bubble here.  But my Fifth Third Bank stock will se us all through that."

Fri, 10/21/2011 - 12:55 | 1797528 jdelano
jdelano's picture

You saw that too?  I was tempted to bomb his email--"Michael, your sorry book is never coming back no matter how much time you spend desperately trying to pimp on CNBC, and when Europe unravels and the tsunami of redemptions start pouring in, I hope you end up on the street, shoulder to shoulder with the OWS hippies you are no doubt mocking and cursing at this very moment, as someone as criminally stupid as you definitely should not be among the top 1%."


I'm in a shitty mood today.  

Fri, 10/21/2011 - 13:06 | 1797570 Mark123
Mark123's picture

Like driving while looking in your rear-view mirror to see how well you are doing....


Got to keep in mind, he may have a teeny weenie conflict of interest in his assessment.  Gotta keep those commissions rolling in!


Fri, 10/21/2011 - 12:46 | 1797480 TooBearish
TooBearish's picture

THis is bullshite - fuzzy math - 2X3 = 5 dammit!

Fri, 10/21/2011 - 12:46 | 1797481 YesWeKahn
YesWeKahn's picture

This is completely solvable issue with the printing press. At some point, only inflation and how people deal with it matters. The politicians only care about being reelected, they could care less about inflation.

Fri, 10/21/2011 - 12:48 | 1797486 disabledvet
disabledvet's picture

The fundamental problem is who gets killed. That's all this is. That's why we look past the meetings. Failure is the option.

Fri, 10/21/2011 - 12:48 | 1797488 Triggernometry
Triggernometry's picture

Triangle? More like dodecahedron...

Fri, 10/21/2011 - 12:49 | 1797490 eBuddha
eBuddha's picture

in times of trouble, the Godfather would opine that it was 'time to go to the mattresses'

today, we should all be preparing to 'go to the wheelbarrows' - the Germans will know what i mean.


Fri, 10/21/2011 - 12:49 | 1797494 earnulf
earnulf's picture

One very slo-mo eurorail wreck happening.   This train left the track years ago and is still hurtling along towards the immovable object that is backstopping the crowds watching this in real time

Fri, 10/21/2011 - 12:50 | 1797495 Ray745
Ray745's picture

That chart about debt rolls looks completely wrong, according to Bloomberg, Italy has 297.635 billion EUR of maturities in 2012, where do they get 100 billion?

Fri, 10/21/2011 - 13:01 | 1797553 Tyler Durden
Tyler Durden's picture

Potentially just financial debt. Here is Buiter's summary of sovereign debt issuance by country by year. So yes, add the two series and you get a number over €4 trillion, which is about what Daiwa estimated some time ago.

Fri, 10/21/2011 - 12:51 | 1797504 tahoebumsmith
tahoebumsmith's picture

Will this weekend's meeting be just a bunch of Bankrupt Nations talking about how much more they can bankrupt themselves or just another bunch of Bankrupt Banks finding more ways to bury themselves deeper? Or are the meetings this weekend actually just another party celebrating the 3 Trillion dollars this global criminal syndicate has stolen from the serfs since the last celebration?

Fri, 10/21/2011 - 12:52 | 1797508 LookingWithAmazement
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They will fix it next Wednesday. Boring world we live in.

Fri, 10/21/2011 - 13:09 | 1797580 jdelano
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On sunday they will say they will fix it wednesday.  On wednesday they will say they fixed it, with details to follow by G20.  

Fri, 10/21/2011 - 12:53 | 1797516 bnbdnb
bnbdnb's picture

I wish I was a EU banker, knowing I had the EFSF backing me up....I'd make the worst possible bets I could.

Fri, 10/21/2011 - 12:53 | 1797522 monopoly
monopoly's picture

It is time to get Physical all. Go for it. lol

Fri, 10/21/2011 - 12:54 | 1797527 Shizzmoney
Shizzmoney's picture

I look at those graphs, and think of only ONE word: "Clusterfuck"

Fri, 10/21/2011 - 12:58 | 1797540 Mark123
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"This does not include the trillions in incremental debt that has to be issued at both the corporate and the sovereign level to preserve "growth", because as every Fed president knows, one can only have growth in the modern ponzi, Keynesian system, when one has incremental debt."

This is the big problem....the exponential debt-fueled growth feedback loop/prosperity forever formula is breaking down.  Only way out is to crash the current system and start again (hard work), hyperinflation (destroys the system anyways), or war (destroys the system too).


Pick your poison.

Fri, 10/21/2011 - 13:55 | 1797794 LawsofPhysics
LawsofPhysics's picture

Yep, pick your poison indeed.  No one bothered to explain an how an exponential equation really works to them. All that remains in question is the timeline.  Going on several hundred years now.

Fri, 10/21/2011 - 13:01 | 1797555 Kurion
Kurion's picture

Listen carefully, think about what you do because if I Go...
We all Go.
What's for supper?

Fri, 10/21/2011 - 13:09 | 1797578 sabra1
sabra1's picture

goats head soup!

Fri, 10/21/2011 - 13:06 | 1797572 JustObserving
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All the currencies in this world are in trouble as fiat currencies meet unsustainable debts and even more unsustainable pension and social obligations such as Medicare (unfunded liability $80.5 trillion).  There has to be massive printing by all concerned.  England is already printing 75 billion pounds.  This is a perfect environment for gold and silver to skyrocket.  But, instead, they wallow like fat pigs stuck in mud.  Can someone explain?  

Fri, 10/21/2011 - 13:08 | 1797577 Mark123
Mark123's picture

The Wizard of Oz.

Fri, 10/21/2011 - 13:29 | 1797660 oddjob
oddjob's picture

Why wait until the music stops to grab a chair?

Fri, 10/21/2011 - 14:08 | 1797833 Zero Debt
Zero Debt's picture

The correlation with money supply is likely intact but gold in the short-term was way overextended.

If you care about the gold price on anything less than a yearly basis you must use technical indicators like trend lines, supports, resistance, SMAs, changes in open interest, market volume, backwardation, premiums, production, central bank action, sentiment etc. and critically, know when to short. Gold near 2000 before year-end 2011 is a safer short than long trade.

Also an increase in the money supply can be used to dilute paper gold as cheap credit at 0% rate can be used to cover losses indefinitely on short positions. Due to the nature of the futures market what can actually happen in a disaster scenario is that the price falls while there is no physical settlement available, only cash settlement. This is a valid concern, refer to metal depository levels and movements.

Sat, 10/22/2011 - 01:37 | 1799591 John_Coltrane
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When big losers like John Paulson (and other hedgies who bet heavily on banks) need to liquidate to meet redemption, margin calls etc. what do they sell to raise cash, BAC at $6 (which they bought at $12) or GLD at $1600 (which they bought at ~$1000)?   You guessed it, and it really drives prices down.  (Its always supply/damand for stocks, bonds etc)  This is exactly what happened in the last 2008 crash with everything (APPL, GLD etc).

Fri, 10/21/2011 - 13:09 | 1797575 kaiten
kaiten's picture

You dont need to bailout both, banks and sovereigns. Either you bailout countries and then banks are OK, or you write down the debt and then you need to bail out the banks. So your triangle is an illusion.

Sat, 10/22/2011 - 02:56 | 1799625 StychoKiller
StychoKiller's picture

Come to grips with this illusion:  Currency is small, colored pieces of paper.

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