It’s time we admit the truth, the EU and its banking system are literally on the edge of collapse. Think 2008… for an entire region. And politicians are going to solve this mess with a March 2012 meeting!?!
EU leaders just decided to impose stricter budgetary requirements from EU members. Only in La La Land could this be viewed as progress. The EU already had budgetary requirements… which the PIIGS countries all ignored. So how will these NEW budgetary requirements change anything? And who or what is going to enforce them?
German banks post some of the highest leverage rations in Europe: higher that Italy, higher than Ireland, even higher than Greece. In fact, German banks are actually sporting leverage EQUAL to that of Lehman Brothers when it went bust
Germany is interested in the EU as a political entity, NOT the Euro as a currency. With that in mind, consider the following story which received almost NO attention from the media:
This is a man who just a year or two ago was so arrogant of his power that he committed blatant perjury in front of Congress (the famed “debt monetization” lie)… NOW writing a letter to politicians whining about how unfair the media has been regarding his monetary actions. This is a massive and I mean MASSIVE shift for Bernanke.
We know that the Fed and other Central Banks have a tendency to leak information to certain friends in advance, so I cannot help but wonder if stocks are showing this strength based on someone knowing something we don’t.
Truly, the only reason to buy into a stock rally here is based on the belief that the Fed or someone else is going to be providing more juice in the near future.
The whole thing smells fishy to me. Aside from the fact that the Fed clearly leaked its intentions as early as Monday night (hence the reason stocks rallied while credit markets weakened), there’s something peculiar about the fact the Fed chose to do this at the end of November.
You cannot build a financial system on lies. It simply doesn’t work. All it does is breed distrust and resentment. And as any businessperson can tell you, without trust business cannot work.
With the European End Game now in sight, the primary question that needs to be addressed is whether Europe will opt for a period of massive deflation, massive inflation, or deflation followed by inflation.
The reason I am so pessimistic is because the bond markets, credit markets and interbank liquidity indicate that the situation in Europe is now into “2008 mode”. Indeed, Treasuries have already exceeded their 2008/2009 peak. Tell me, what do you make of a situation in which the bond markets (which are far larger than stocks) are acting as though we’re in a Crisis worse than 2008… which stocks are rallying?
This will NOT be permanent, nor will we enter some kind of Mad Max apocalypse. But there will be temporary shutdowns of the banking system as they work through this mess. And given that most folks rely almost entirely on their credit cards to survive and haven’t prepared at all, things could indeed get very messy at times
The IMF move is just a backdoor bailout that the Powers That Be are hoping the public won’t notice. None of the IMF backers were willing to commit money at the G20 meeting last month… so why are they willing to do so via the IMF now?
This is a holiday week so trading volume will be light. However, recall that it was during Thanksgiving 2009 that the sovereign defaults first started when Dubai asked for an extension on $60 billion in debt it owed. Will we get a European version of the Thanksgiving day collapse this time around with Italy?
There are now only two REAL outcomes: 1)The ECB prints (and Germany walks) resulting in the Euro losing at the minimum 30-40% of its value, or...2)Massive defaults and debt restructuring accompanied by systemic failure in Europe.
