"Whither Europe?" - UBS' George Magnus Asks What Happens After The ECB Prints

Tyler Durden's picture

'By George' author, UBS George Magnus asks the right question, and one posed by Zero Hedge two weeks ago, namely even assuming Germany relents and allows the ECB to print, what happens then? "Some argue that Germany will, sooner or later, capitulate on this issue too, since the only real alternative to the ECB adopting a full lender of last resort role is the slimming down of the EZ in what would be dangerous, unpredictable and almost certainly acrimonious circumstances. If the crisis escalates alarmingly, the ECB does look a little more likely to be given the light to widen its remit, even if under conditions. But then what? How would German voters and the powerful banking elite react to ECB policies that would turn the Bundesbank white? And what would the political consequences of further printing of money be? I ask the questions not to disagree, but to emphasise that what many of us think as the logical way out also has consequences that may not be immediately transparent."

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TeamDepends's picture

"Tough year(s)" is the new depression.

trav7777's picture

the answer:

A) the Fed prints

B) the BOE prints

C) the BOJ prints

D) all of the above

NotApplicable's picture

Good thing modern OSes are 64-bit. They're gonna run outta digits, otherwise.

wisefool's picture

Naw, we can and do get by with 32 bit wide registers, you just use sceintific notation. you lose precision, but nobody cares about that except for Mitt Romney. Seriously. About a year ago, Tyler released some photos of the Pentium 2 based PCs Brian Sack runs the POMO operation with. not sarc.

Momauguin Joe's picture

Uncle Warren provides a blinding glimpse of the obvious: "The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working”

masterinchancery's picture

No rearrangement can compensate for the real major flaws in Europe; not enough real production to actually meet all the social promises that have been made, and disastrous demographics which will continually make the problem worse.  Devalueing the currency and wiping out the middle class, as advocated by clowns like George Magnus, will only speed up the destruction, and hasten the onset of the next Hitler or Stalin. The Germans know this.

Jonbutterfly's picture

I do agree. But here is another question I want to ask on top of all thoughts coming from the above article: "What is happening to democracy in Europe?" I am from Europe although I decided to live abroad. It seems to me that we move away from a free society and I can see the same trend going on in the United States as well. I would not feel comfortable living in a society where cameras are instaled into public street lights. It has to much of a touch of 1984 from Georg Orwell!

Papandreu wanted to ask the Greeks if they want accept the conditions demanded by the EU. Insteed of leting decide the people they put an Ex JPMORGAN manager in charge. This is not democracy!

I like this video, especially due to the fact that a !Russian! news station  is the author. What a twisted world we live in. DJIA

Dick Darlington's picture

slimming down of the EZ in what would be dangerous, unpredictable and almost certainly acrimonious circumstances.

Gee, yeah, luckily the current status quo is all about unicorns, CONfidence, prospeeretee and stabeeletee.

Cognitive Dissonance's picture

"I ask the questions not to disagree, but to emphasise that what many of us think as the logical way out also has consequences that may not be immediately transparent."

We all know where this road ends folks. We just don't want to admit it while we're all on the Road to Perdition.


CPL's picture

Let them walk the road.  There is no sense in attempting to change the motivation or dogma of the human race, allow the situation to happen and just sit tight.


We'll rebuild it once the fools are finished destroying themselves over paper.

redpill's picture

Dead EU walkin', I say we gotta dead EU walkin' heeyah!

Caviar Emptor's picture

It ain't just EZ: The whole Global Ponzi is imploding. Totally self-referential, correlated and dependent on mutual secrecy 

spiral_eyes's picture

Collapse in the long run is a good thing: it erases the debt, erases the bad institutions and bad currencies.

In the short run it might be painful without gold and silver, water and canned food, but who on ZH doesn't have that?

greased up deaf guy's picture

"what many of us think as the logical way out..."

speak for yourself, buddy.

masterinchancery's picture

Exactly, and this article is pure sell side crap for failing to recognize it.

Popo's picture

Last sentence: "But the reality is the reluctance of creditors to get deeply involved in a debtcrisis, which they claim was not of their making. This is not a blame game, but a recognition of the need for symmetric behaviour".


Good luck with that.   What is "needed" and what is both politically and realistically viable are completely different subjects.    To discuss what is "needed" without a discussion of viability is a waste of ink.  Typical beurocratic idiocy.  Go home.


hedgeless_horseman's picture



If your only tool is a printer, then every problem is deflationary.

GeneMarchbanks's picture

First you print then you hope.

... something ... more hope...


TeamDepends's picture

At least we still manufacture something...

Franken_Stein's picture

What should happen then is very clear.

A terrorist attack by Germans on the ECB, an assassination of Mario Draghi and a burning down of the ECB tower.

That's what should happen.

French Frog's picture

Poor lil ECB tower: not yet finished yet some hoodlums want to burn it down already!

The times we live in...


KNiCKER's picture

The concequence is that my money will be cut in half with (ONLY) 7% inflation over a 10 years time span...

Wages off course will not rise with inflation... Fuck them!

Zola's picture

"the logical way" ??? What a wishful thinking...

redpill's picture

There hasn't been anything logical in Europe since the Vereinsthaler.

john39's picture

uncanny that the same fascist symbols show up over and over throughout history...  the eagle being just one example.  stranger still that almost no one even bothers to figure out the symbolism...

baby_BLYTHE's picture

I am still waiting for the currency version of stamps[dot]com. Every man, woman and child in this nation should have the ability to print up their own monies. After all, the Constitution never gave permission to a private central bank to create the nation's currency. Let's get the party started!

trav7777's picture

you already can- it's called an IOU

DosZap's picture


No it did not,but CONGRESS did.

So, so much for wishful thinking.

monopoly's picture

Gonna save this report for later. It is over, just over. How about BAC with a 4 handle, possible? You bet.

agent default's picture

Germany will not debase the Euro to save the PIIGS, that much is true.  They want the ECB to hold its firepower for the time this mess hits Germany nad the core it self.  Now, you can count on it hitting the core and Germany, because they may better off than the PIIGS but not that much better off, they too have huge debts, they have pretty much lost the southern Eurozone export market (broke remember?) and they do have a pile of unfunded liabilities.  The ECB will eventually have to print to bail out the core.  The periphery will have splintered off by that time.

Jayda1850's picture

What happens next?

The PIIGS realize that there is absolutely no incentive to push through unpopular austerity measures, not when the ECB will monetize any future government spending. All bailout countries will keep promising to make reforms, only in as neccessary to secure the next month's bailout. Eventually the ECB's balance sheet expands by trillions of Euros, and then they go all out Goodfellas style. 

When you can't borrow another dime from the bank and can't buy another case of booze. You bust the joint out, you light a match.


The Ram's picture

More like 7% a month once things really kick-in here circa beginning of 2012.  Stock-up.

defn8Dog's picture

Not just printing but unlimited printing as the PIIGS run wild.

Either that or, Europeans at War.  Real bullets, but also great shoes, boots and finely cut commado suits, for the perfectly suited guerilla. 

imsaul0968's picture

For those of you who invest in an IRA or for long term goals, theres a better approach than buy,hold,hope. Stocks follow the economy so analyzing the economy, specifically the factors that are "leading indicators" and having exposure to equities only when the economy is headed in the right direction and avoiding equities in favor of safe haven baskets is a much more logical approach. And missing the major drawdowns is the only way to help ensure meeting your goals.  If you are interested in investing in a portfolio that tactically invests in equity and safe haven baskets via ETF's automatically, please email me at:


and I'll add you to the weekly market commentary & portfolio update distribution list.  Its free to add you and you can follow along our model and our views.  We have been RISK-OFF since 6/30 so have missed all this wicked volatility. Currently invested in short duration treasury baskets as flight to safety drives interest in our debt. 

redpill's picture

We won't print, we'll just buy an infinite number of bonds.




P.S. Christine "Legerdemain" Lagarde is on board, too

BlueStreet's picture

What happens after the ECB prints?  We all book those cheap European vacations.  

Robot Trader's brother's picture

full remarks is a blank page.

is that the future..???

Caviar Emptor's picture

Print? Sleep well for a night. Then wake up to a gloomy morning


NotApplicable's picture

Next? Everybody prints!

Then someday, it all gets rolled up into one great big giant ball called an IMF Consol (or something similar), where ZIRP is instituted in perpetuity, and a single choke-hold upon the people of the world is achieved. Instead of interest, a global admin tax will fund its "maintenance." Think of it as the next ban on usury, while negating the effects of repudiation of odious debt. TADA!

They've got more eggs to break first, though. Germany and the US, in particular. And of course, nearly ALL of the world's banks, sans a few of the privileged ones.

BandGap's picture

What's the over/under for the Huns to tell the ECB to shove it?

It's funny, the die has been cast but everyone is jockeying for the last to feel the sting of the icy water.

ex VRWC's picture


PIIGS need to become more like Germans, but you cannot force them to, or they will fall into deflation.

Germans need to become more like PIIGS and increase consumption, but you cannot force them to, or they will revolt and throw out their government.

You cannot propose empty guarantees to solve this.  Only real money in the form or printing will do.  We should print the money because a small amount of inflation should be OK.

As Europe collapses they are looking to Asia as the market for their exports, since they won't be able to export to each other.


Can I get paid the big dollars to produce 'analysis' like this?  

Canucklehead's picture

If the ECB prints, it will only be a matter of time before they eat their "seed corn".  Everyone knows this.  If Germany were to relent, all of Aesop's fables (mankind's experience) will be replaced with binary oughts and naughts.  The Borgs will rule the world. 

Soda Popinski's picture

Ben will be as environmentally sound as possible.  Think how many printer cartridges he will save by digitally expanding the feds balance sheets.  The EPA should give him a medal.

Stockmonger's picture

Not surprisingly, nowhere do the words "default" or "restructuring" appear in this banker analysis.  The "only" way out is for everyone to surrender sovereignty to the United Bankster Guild, but in the meantime the ECB should print money to ensure that our bond cash flow is undisturbed.

These people are like vampires demanding that they have unfettered access to the central blood bank for transfusions.