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When A New LTRO In The Elimination Stages Of Euro 2012 Just May Not Be Enough
The Euro 2012 football competition has entered its elimination stages. According to Citi's Matt King - one of the few respectable strategists out there - the elimination round has also arrived for the other EURo. There is still hope, but it is rapidly fading, and every additional half-baked, semi-efficient "resolution" only confirms the skepticism of the ever-increasing crowd of naysayers: summits, summits, and more summits, all the while nothing changes, and the German population: the only source of any European stability, is becoming increasingly belligerent toward the entire European experiment. The other problem: we are now in the first session of extra time. So even as Germany inches ever closer to winning it all in the European football arena, will the tradeoff be a loss for everyone else who now relies exclusively on German benevolence? A few days ago, David Marsh, writing "Don’t count on Germany’s economic surrender" in the FT, made just this point. And he is right. Yet the capital markets, after nearly throwing in the towel on Spain last week, have rebounded strongly giving some hope that this time something may be different. It won't be. King explains.
Despite this week’s squeeze tighter in CDS, and still relatively limited widening in cash bonds, it is hard to escape the feeling that the rallies are becoming shorter as the stakes become bigger. The market’s failure to rally for more than a few hours on about the “best” Greek election result it could have hoped for seems highly significant. Investors seem to be “seeing through” the partial solutions, and anticipating the endgame, more rapidly than was the case previously.
When your only investment strategy is prayer, it is probably not a good thing:
That the sell-off has not been bigger owes much to the anticipation of a policy response. CDS and especially cash are much tighter than they were last November, even as Spain has been reaching new wides. Investors have been reluctant to sell cash bonds given the growing likelihood that the ECB calls for extra time, most likely through a rate cut, relaxation of collateral rules and perhaps a new, potentially 5-year, LTRO.
But we have serious doubts as to the effectiveness of such measures in providing a long-term solution against a backdrop of rapidly weakening economic growth and growing fears about ultimate sovereign solvency in both Spain and Italy. The effectiveness of the first LTROs was due not only to the liquidity they provided, but to optimism that they represented a more determined approach to solving the crisis.
A broke Europe may be full of sound and fury, demanding everything from Merkel, yet all she can say is "nein", signifying everything.
This time, despite a rowdy chorus of policy suggestions from the IMF, the US and others on the sidelines, we see little sign that Germany is prepared to concede just yet, nor that the ECB is prepared to change the rules of the game entirely. The main focus of optimism following the G20 was the prospect of €600bn in EFSF/ESM bond buying, yet such a possibility was promptly described by Germany as being “theoretical”. On the even more critical questions of direct injections to banks, and the ECB granting the ESM a banking licence, the answers still seem to be “nein”. Likewise, on their own turf the Fed’s failure to do QE suggests an awareness that even referees are conscious of the limits to their authority.
So moving on to the football analogies, and an ending that will hardly leave many happy.
We can imagine steps which would justify a more positive stance, but they need to be game-changing substitutions, not the sort of half-measures we have seen to date. That means innovations like having the EFSF/ESM cap the yields on primary auctions in Spain and Italy (and thereby hoping to avoid downgrades to junk from the other agencies, if not from Moody’s, who seem to take the strictest line on any form of official sector support). The creation of a proper deposit guarantee scheme (covering redenomination risk), with the possibility of temporary funding from the ECB, might also help stem the steady deposit flight and allow banks to step up their purchases of government bonds.
So, like fans everywhere, we remain glued to our screens. If coming weeks lead to a new, combined and coordinated €600bn plan to bail out both Spain and Italy by supporting their primary markets, with additional ECB liquidity providing stimulus to bank buying and hence helping avoid associated downgrades to junk, markets will rally strongly. In contrast, anything short of this, or a more “conventional” bailout programme for Spain which fails to address Italy, could easily lead to the crowd’s mood turning much uglier.
And just like Germany winning it all, so the mood turing much uglier, if only so Germany can pass its European federalist agenda with no opposition, is precisely what Germany wants. And what Germany wants, Germany gets.
In conclusion...
After all, this is not some endless league in which points deficits can go on being accumulated indefinitely thanks to the grace of TARGET2. This is Euro 2012, and arguably we have had at least one session of extra time already.
At this point not even we know when he is referring to a meaningless sports tournament, and when to a soon to be meaningless and failed monetary experiment.
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"and the German population: the only source of any European stability, isbecoming increasingly belligerent toward the entire European experiment."
Says who? Merkel has been losing regional elections.
NEVER FORGET THAT HER OPPOSITION IS MUCH MORE willing to have the ECB create Eurobonds than she is. She, no matter how often she caves, is the most reluctant of all the leadership to squander German money.
(Reuters) - The euro will survive even if Spain were cut off from capital markets, European Central Bank policymaker Ewald Nowotny said, adding the currency was in solid shape despite financial problems in some member countries.
Euro in good shape despite Spain's woes: Nowotny
http://www.reuters.com/article/2012/06/23/us-euro-ecb-nowotny-idUSBRE85M08Q20120623
LOL
Crap....I don't think they're buying the bullshit anymore.
It's probably worth pointing out that Ewald Nowotny is an anagram for both "Wantonly Owed" and "No way Letdown".
Date Nylon Wow.
Just the fact that they have to say this, is evidence on itself of the opposite.
Never believe anything until it's been officially denied.
The main opposition now can very quickly disappear off the radar screens in Europe today.
The financiaql crisis will lead to a political crisis in Europe. See the rise of Syriza and Golden Dawn in Greece, the anti-EU opposition party in Finland, the upcoming Dutch genreal electuon in whicjh there is every possibility of an anti-EU party being the largest party.
The political ramifications will move even faster then the financial ones at some point in time. I reckon that time is very nearly upon is.
Germany 8
Greece didn't
will probably get the penalty shoot out before the elections next year
it'll be very funny if Germany looses next game, then you could see the news headline "Germany Leaves Euro".
And watch retard algos start taking EUR down in big gaps.
so potentially all a group of really smart hackers needs to do, is to synchronize some sort of temporary blanket over global news outlets and innundate cyberspace with information that Germany has just left the EuroZone.
by the time these fucked up HFT's "realize" they have been duped or some hapless banker pulls the plug after 10mins of utter confusion and disarray, the markets would be razed to the ground.
And the FBI will show up at my doorstep in 3...2..1.
Eurobonds are coming and then the US debt / interest rate/ inflation problems will be in the limelight. It's almost time to go long the Euro.
eurobonds are impossibility with the current treaty. If you listen to Germany the are giving clues that a new treaty must be passed for eurobonds to happen. Its not really that they are against it, its that 2013 is an election year in Germany. For eurobonds to happen Germany needs a catastrophic event to get a eu treaty amendment passed in their own legislature as it not not a very popular idea to share burden in the broke eu contries debt.
And he uses the word "Investors" like they were a group of bankers in top hats and suits walking in and out of the exchange when by now most look like Hugh Hendry after he's had a bad night. I say, "may the quoted sir watch out for buses in his la la land because before long, with his attitude, he's going to find himself under one."
Still a lot of news in the pipeline capable of moving this overpriced market higher. Amazing..
2012 Top Fuel EU-limination LTRO QtrFinals BiCheZ!
There is still hope, but it is rapidly fading, and every additional half-baked, semi-efficient "resolution" only confirms the skepticism of the ever-increasing crowd of naysayers:
hope for what? a real solution? like.....letting the free market work and allow every bank in europe to go under and protect only the depositers? that kind of hope? or hope that germany will once again lose its battle against the rest of the continent and the u.s., just as in the two previous world wars? so what kind of hope are we talking about by the so called citifed "expert"..........keynesian hope or logical hope?.........................
Kito, there is still hope,hope for Germany to profit from the misery
Of the so-called piigs.hope for TPTB to reach their goal of creating
A debt slave population in Europe so they can move on to enslave
The rest of the world. Hope for the bankers to keep their giant,obscene
Bonuses while gambling away depositors money. Hope for inept,crooked
Politicians to screw everything up and still get re-elected. Lots of hope
Out there, just not for The masses, they have only despair to look forward to.
http://www.washingtontimes.com/news/2012/jun/6/eu-seeks-shield-taxpayers...
European officials proposed Wednesday a new system of financial regulations that aims to keep bank failures from costing taxpayers billions and bankrupting governments.
Worth a read I guess.
I'm a simple guy. Opinions that are mine and mine alone follow:
What's this at the end and how would it be funded?
"Other measures that senior European officials have floated recently include creating a central deposit insurance scheme to reassure savers across the continent that their money will not disappear in case a bank runs into trouble. A key worry is that rumors of a bank failure might trigger a bank run, fueling panic that could spread across countries."
By the taxpayers like the FIDC here in the U.S.? Bah! If so, kind of defeats the whole "aim to keep from costing taxpayers billions" and makes it just a facade! Banks are either allowed to fail and the debt is written off or they aren't.
Bring back the bank run! Banks need to learn to be wary of who they loan to rather than trying to loan out a million dollars to anything that has a pulse, out of greed. And people need to learn that no one watches and takes care of their own money like themselves.
I'm not for having banks bailed out by anything other than an insurance policy purchased by the bank in the free market, if anyone in the free market has a desire to offer such insurance. If people want to trust having some of their money at a bank, that is their risk and theirs alone. If you choose to have a safe at home and be your own central bank, nothing wrong with that. End the government political fear mongering done in the name of, "We have to bail out and save the Bank on the backs of masses because if one person loses their deposit the world will come to an end!" All politicians care about is remaining in power, disgusting. And banks, companies, and jobs that are propped up by political bailouts just continue to drain money and resources away from where they would normally diverted to, real actual productive jobs that contribute to raising the living standards for all.
I believe/hope that Banks will need to offer real positive interest bearing accounts again after what I believe is an unavoidable 'reset' resulting in the return of free market money, be it gold and silver, bitcoin, or whatever the market determines money is in order to attract depositors/investors.
Regards
http://www.reuters.com/article/2012/06/23/us-montepaschi-bonds-idUSBRE85...
(Reuters) - Italy's Banca Monte dei Paschi di Siena (BMPS.MI) is negotiating with the Treasury and the Bank of Italy about issuing at least 1 billion euros of government-backed bonds to plug a capital shortfall, two sources close to the matter said on Saturday.
So Italian bailout has begun. Manic monday in he works?
Mamma Mia!! :)
Bullish, bitchez!!
When your only investment strategy is prayer, it is probably not a good thing
Amen
Every day we see Chancellor Merkel in action battling with the European Central Bank.
But America has no one to fight her central bank.
Merkel speaks for Germany.
No one speaks for America.
Bernanke speaks only for the private banking cartel that owns the Federal Reserve.
(Obama obviously makes no decision for the economy that isn’t pre-processed by the bankers; nor would he qualify in that he is both intellectually unequipped and a total puppet of the banking cartel. The same can be said of the Congress, except for Rep. Ron Paul.)
The difference between Merkel and Bernanke is that Merkel is responsible to her people; Bernanke is responsible to no one except the international bankers for whom he works.
In other words, U.S. citizens have no advocate to fight for their economic interests against the special interests of America's financial elite such as the bankers and large multinational corporations.
So say what you will about Merkel, but in the fight for a nation’s financial and economic future, German Chancellor Merkel has incredible responsibilities on her shoulders as she walks the tight rope between the bankers and the voters, either of which can end her career.
The European crisis has not only brought the role of European leaders more into focus than ever before but it has demonstrated the incredible void that exists in the financial leadership of America. And that makes it even more ironic that the United States, which pretends to have greater freedoms and free markets than any other nation, has no political figure to fight its economic wars in the interests of the people.
http://s3.netdialog.se/1_20120623092148_146687305.jpg
Merkel is a traitor. She has never spoken for Germany. She acts for the NWO.
Some blabla of course comes out of her mouth to keep the sheeple at home calm.
I'm with you. Anyone that's for keeping the debt based fiat paper money banking scheme together is either seriously misguided and/or deluded, or works for the NWO. Merkel is plenty high enough up there in the hierarchy that it should be obvious that she works for the NWO.
TARGET2 provides "automatic central bank funding for EMU countries suffering capital outflows provided through it".
Merkel isn’t the point; whether the Germans like her or not isn’t the point. The point is that the German people can vote her out – they still have a modicum of representative government which is a lot to say in a country still under the thumb of her conquerors. And it is true that the Germans were neither asked, nor could they vote, on whether or not they wanted the EURO.
And, yes, the chancellor may be a lot of things, and she is dangerous, but she is not a puppet.
On the other hand, America has a dictator; an unelected, full-blown dictator – the Fed – the author and instigator of world governance, your nwo.
Yes, it is hard to defend Merkel in that she doesn’t break with the bankers (who can take her out of office) and take care of the German people (who can take her out of office) as she ought by saying: Even though I lose the next election, a Europe that subtracts sovereignty from nations is not a Europe that I support.
What she’s trying to do, IMO, is to get the best she can while under the bankers’ boot for 1) German big business and 2) the German people. And in order to do that she has to make compromises because big business, albeit engaged in world monopoly and exploitation as in the US, is what has helped make Germany a big growth economy. At the same time, IMO, she hopes to get the most she can for the people.
But, I agree, that in the end if the international bankers such as Josef Ackermann aren’t trumped, the bankers will again win the war.
"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe." --
Abraham Lincoln
Lincoln was wrong and Lincoln was right: on both counts he lost the country.
Hi JR,
I have to give you a +1. Especially as a fellow Ron Paul supporter. :-) You are obviously not uninformed. You seem much more informed about Europe than I. I agree, here in the U.S. we have a dictator. The Congress has allowed itself to become, 'subordinated', to being a potted plant, as Judge Andrew Napolitano would put it. They may be waking up and doing something about it, in light of their pursuing investigation and litigation with "Operation Fast and Furious". One can hope, maybe even for impeachment!
"And it is true that the Germans were neither asked, nor could they vote, on whether or not they wanted the EURO."
If that isn't a hint as to whats going on in this world I don't know what is. What's next? Amero? Not in my backyard. Ron Paul 2012 and Free Market money ftw!
Cheers
I'd rather have Merkel than the two we have now running for top spot get in.
At least she is following the will of her people. It cannot be otherwise.
European leadership, with the exception of the banker "technocrats," has actually been much better than American leadership throughout these prelimary stages of the Western financial collapse. At least the Europeans have "had it out." They will hang the bankers and hang together as nations.
The Americans are in denial.
Spiegel Online reports (on a saturday afternoon during Euro 2012...) about an interview with german interior minister Schäuble to be published in the print edition out today. http://www.spiegel.de/politik/ausland/euro-krise-schaeuble-prophezeit-baldiges-europa-referendum-a-840549.html Salient points:
- Germans will have to vote for a changed fundamental law (german equivalent of constitution) soon in order to admit further european political integration. "A few months ago I would have said: In five years? Not in my lifetime! Now I am not so sure anymore". [not going to happen w/o a heavy crisis...]
- "Up to now member states in Europe almost always had the last word. This can't remain like that. In important political sectors we have to move more competencies to Bruxelles, without the possibility that every nation can block the decisions" [one got to wonder in what kind of shitty socio-economic context the Europeans would accept that... shudder...]
- "The Europa of the future will not be a federal state like the USA or Germany. It will have its own structure. That is a thrilling attempt." ["its own structure", eh? Like the Dictature of the BurocRats?]
- "There is a concrete risk that - in case of a break-up of the Euro, which I don't see - many of the objectives reached and appreciated so far, like the common interior market and the freedom of movement would be questioned. But a break-up of EU would be absurd. The world is moving closer and closer together, and in Europe every country would return to going its own way? That cannot, will not happen, it will not be allowed!" [so we have to/will renounce our national identities "because everybody else is doing it"??? Yeah, sounds about right...]
"not going to happen w/o a heavy crisis..." - yeah, that's the problem
Schäuble of course is the biggest of all traitors. In a normal country he would be prosecuted for high treason and punished accordingly.
You have some of the right of it I think, but not quite the whole gist. Currency and the economic structure of Europe certainly are the catalyst for change, but the considerations of Germany and all of the European nation-states are geo-strategic. Your source's view,a sort of lollipops and butterflies vision of a grand European bureacracy, are correct in so far as... war may be coming... and the Europeans instinctively feel it.
It falls upon Germany to hold a European NATO together. The downing of a Turkish fighter in Syrian waters reinforces this point. Germany, France, and Italy are natural allies: come what may. They will hold together and bring much of western Europe together: even through a Western financial collapse, which is imminent.
DOW weekly chart shows uncertain market & fluctuating consensus with likely bullish pattern contained within megaphone wedge.
http://www.zerohedge.com/news/2012-12-24/market-analysis