Seed Pods? No ... Euros!
Ok, we saw is coming. Cyprus needs a Bailout. That was last week. Today - Fitch cut Cypress to Junk. I'd link my BB terminal on this if I could, but you'll have to take my word for it.
So no big deal... Right? Not unless you are a Cypriot looking for a lifeline. The gall is that certain ECB and EU upper-echelon players are shrugging this off as a "so what" moment. Arrogance.
Spain asks for formal bailout. Sure - now we have terms!
So the Bailout Tally looks like this so far (in Euros):
Portugal: 85 Billion
Ireland: 113 billion
Greece: 300 billion
Spain: 100 billion (looking more like 165 billion)
Cyprus: 10 billion
Italy could need 1 trillion (and no one is talking about it...)
France is in the same boat as Italy, but France doesn't have the same problem. France is like combining Greece and Italy. France wouldn't matter because if Italy goes then Europe goes.
France and Belgium have taken on the toxic debt of Dexia bank through joint nationalization. They have no plan and its been speculated that they have been sitting on the debt waiting for a moment to dump it (that'll be a long wait) or they have been repackaging the debt back to their Euro Buddies.
The Bail-Out mechanisms are getting depleted. If the they decide to leverage the fund with good ol' Euro debt (face it - it's all toxic), then they will need to induce vomiting immediately.
Germany is not immune and has been obscuring a little "problem" of their own. Back when the wall came down, the re-unification brought on a huge debt problem for new Germany. The Eurogroup then said they would "look the other way" if Germany did them a solid - Join the Monetary Union - thereby castrating the bundesbank... (That didn't work either, but these silly Eurocrats are a stubborn lot!)
The Tragedy of the Euro explains a lot of this mess.
Be warned. The virus has been carried to all parts of the Globe thanks to Spanish Banks (they are everywhere). It is similar to the Sicilian Merchant ships spreading the Plague, where we have Spanish Banks in every corner of the world... I wouldn't be surprised if there is a Santander branch in Antarctica! Possibly a good reason why China has been sidelined...
Next thing is a full blown credit crisis...
The result of the system : Everyone gets bailed-out. The Bailed-out countries get to host Cristine Lagarde for lunch after she is done tanning... No reprieve for the sinners - but we'll see as the Squeaky Greek Wheel is still getting the grease!
As far as the system is concerned - Nigel Farage has been correct :
And in case you had missed it: whenever someone mentions the wonders of the Euro Leaders and how special they are, Nigel Nailed them from the get-go. Europe - you can never be America Junior because we ELECT our idiots to office rather than "accept" them by fiat.
14 comments:
ikaika you are on a roll.Good piece. Very depressing all this crap.
Makes me want to only put 3 in the 13 clip of the 40mm and spin it and pull the trigger. Hmmmm.Let me re-think that one.
*ITALY BANKS, COMPANY GROUPS URGE ECB GOVERNMENT BOND PURCHASES
*ITALY BANKS, CONFINDUSTRIA URGE ECB TO MAINTAIN LIQUIDITY
*ITALY BANKS, CONFINDUSTRIA SEEK FRAMEWORK FOR PROJECT BONDS
They are desperate.
France is pounding the table for Euro Banking Union.
I believe that Italy and France are already in-too-deep. It just hasn't been reported yet.
Ikaika...what kind of pain will it take for Germany to finally take their chips and go all in? or all out??
And does any of it do a anything to muddle through this?
Ill start sauteeing the devils caps in butter
It won't take pain, but an election cycle.
Merkel reluctantly stepped into this mess since it was believed that Sarkozy and the forces of austerity would rally all of Europe... That didn't work.
in the early months of the crisis, Germany was more than treading water. They were enjoying solid pan european export business. With the US still sputtering and now China slipping, it is starting to show. It may not show up in the bonds, but Germany is currently experiencing a real estate bubble.
You can't say "bubble" to the experts, because they want to maintain the illusion that Germany is immune to such things...
All is well...?
I knew they were hugely benefitting from the weak euro.Isnt a potential rival of Merkel's more Pan-Eutopean than her?
Sadly about the only thing i see solving all this in one swoop is a good old fashioned pandemic.2 yrs of knockong off 80% of the elderly.It fixes our entitlement mess and jobs open up...Bird flu is now only 5 genetic mutations from killing ferrets which means it can really whack us...Reset on the 3rd rock from the sun
Last week I read that if you want to deposit money in Swiss banks or buy Swiss bonds, you have to pay the SWISS interest.
That is how desperate the search for safety is right now.
At least in the short term, the Euro going South is good for the US Dollar. Compared to Europe, we don't look so bad.
Kyle Bass called it back in 2009, paraphrase: If you think the USA has problems, wait til you see Europe!
The Eurozone is problematic in construction and the current fix is anti-democratic.
Imagine being married to 17 different wives in 17 different houses in 17 different locations?
Here's a good article, but comb through it as it is rife with hysteria. The Germans are already 700 billion into this mess... they are holding the bag.
http://www.spiegel.de/international/europe/fears-grow-of-consequences-of-potential-euro-collapse-a-840634-2.html
Whoopsie!
*S&P PUTS EUROPEAN SYNTH CDOS ON WATCH AFTER MAY '12 RUN
Something tells me that when the Euro finally goes, it will be quick and startling.
At some point Euros will not be printed fast enough to fill the fiscal holes left by all these failing countries.
Iakaika,..... What i take from that article is there could be a worse case than what we saw in 2008-09...But maybe that frightens Germany enough to go all in...If they do nothng they get whacked . Maybe soofter slower whack going in.???shit
To add some more uncertainty. To the East, Russia may be in big trouble. They need oil at $90+ per bbl to keep their economy creaking along.
Brent crude just dropped below $90 and has been trending down for weeks now.
I wonder what the Russian bear will do when its back is against the wall?
Agree.eventualy the Saudis in their religious effort to cripple Iran will also hit a "magic number" necessary to fund their welfare state...
Im mixing up my anti-freeze smoothy..... Anyone care for seconds???
"I wonder what the Russian bear will do when its back is against the wall?"
"Vee have vayz..."
The solution to the Eurozone crisis (if you are Jose Manual Barosso) is Pan-Europe Nationalization controlled by a central body. In short a Soviet style government. Sure, people will starve, but the Beureaucrats will claim victory.
Der Spiegel put out a nice article on "What If The Euro Collapses" or Why Germany Shouldn't leave...
http://www.spiegel.de/international/europe/fears-grow-of-consequences-of-potential-euro-collapse-a-840634.html
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