Friday, April 20, 2012
- Betting Against Europe
I'm very busy today so I just have one quick note.
I think anyone who is 'worried about Europe" is making a strategic mistake. I think they are underestimating the lengths that Europe's leaders (if you have a better word for them I'm open) will go to in order to keep Frankenstein's EU monster alive.
Germans can get upset. They can hold elections. They can have protest marches and riots. It won't matter. The people running the EU will do whatever it takes... I mean that literally... they will do WHATEVER IT TAKES to keep the EU together. They don't care about cost. They don't care if it looks 'impossible' to the pedestrian accountants and financiers.
Spain, Portugal, Greece, Italy - none of it matters. They will pay any price. They view it as a existential battle. And the Fed will give them all the clandestine help they need. All of that debt duration will be transferred to the central banks by hook or by crook. There is no end game here, because they have no intention of ever letting the game end.
The rest is just ex-post justification and positioning.