Reluctant as I am to criticize anyone who stands in direct opposition to the President and his "War On Commerce", Mitt Romney said something silly that he can't possibly hope to fulfill:
"We're not going to send checks to Europe. We're not going to bail out the European banks. We're going to be poised here to support our economy," Romney told CBS television's "Face the Nation" program. Now don't get the wrong idea, this is technically correct. We won't be "bailing anyone out" like we did with the T.A.R.P. program. But if Europe goes off the cliff the US federal reserve will pump ... I don't know... potentially Trillions of new dollars into the global economy to keep things afloat whether President Romney thinks it's a good idea or not. And that will no doubt be portrayed by his less economically literate political opponents (and their totally economically illiterate supporters) as a "bailout for Europe".
The European crisis is not over. In some ways it's just starting. And it is an existential crisis for the unelected Government that is running the European Union. Those people will do absolutely anything they have to in order to preserve the political status quo. And in the end, the only thing that is going to get Europe from "today" to "tomorrow" is cash; lots, and lots, and lots, and lots, of cash. Germany and the (more) stable EU members will have to come up with most of it. And it will be fascinating to guys like me to see what kind of Rube Goldberg political device the pols come up with to produce that cash without their domestic voters realizing it's their pockets it's coming from. If things calm down for a while it's possible that's all that will be necessary.
But if things get really desperate, the Fed WILL be coming up with additional liquidity, and will in effect be transferring a credit derivative to Europe, only to have it re-sliced and portioned out to the more troubled members by the ECB. It won't be a question of carefully thought through economic navigation, it will be a question of yanking the wheel to keep the car from going off the cliff. President Romney can plan all he likes, but in the end his crisis management skills are about the same as anyone elses.
19 comments:
True TOm - as far as the Euro Crisis is concerned, we've only just begun or as Van Rompuy erroneously stated: We've turned the corner.."
In my correspondence to my paying clientele (a daily distribution) I mentioned on friday how Greece was a forgone conclusion and the real elephant in the room is France. Hollande and his red diaper socialist party have sealed the deal. They will go 100% full bore anti-austerity and blow-out the spreads. Greece only considered a coalition government of a downtrodden people wanting to poke a straw through the austerity stricture just to catch a stale breath... France - woohoo they can parade around with their underwear inside out and rub it in the face of the Greeks.
So today I'm in my office at 4:00 am eating my shredded wheat and drinking some homebrew. I have to tune to Bloomberg, because CNBC is all informercials until 5:00 am in Miami. Bloomberg has the HSBC chief global economist on. I figure I give him a listen. He says (I paraphrase) That the greek election is proof that Europe works, the Spanish yields over 7% are not really unsustainable, they are only the result of the Eurozone's application of the requisite tightening...
when I heard that, milk, partially digested shredded wheat and bile came spouting through my nostrils. A Spit-take the likes of which hasn't been seen since Harvey Korman (RIP).
The gist of HSBC Chief Economist: Don't look at Europe, its the USA they are the shitshow... true -economically we are a shitshow, but our FRB is backstopping all Eurozone bailouts.
HSBC Chief Economist then went on to perpetuate a fallacy: The US During the Clinton adminitration was more fiscally responsible and that explains why the EURUSD back then was $0.80 on the dollar...
Uh - not neccessarily Mr Over-paid-history-forgettin'-Chief Economist (WTF is a Chief Economist anyway?)
The reason why the Euro was weaker than the USD in the mid-1990's:
The market was still unsure of the debt and deficit picture within unified Germany (and that issue is still unresolved!). The shared currency was still being phased-in.... Only a few of the EMU members were 100% Euro during the mid 90's.
I had to send out a rebuttal to this and even tried to call Bloomberg TeeVee - "My name is IkaIka, I'm the Head of Internation Equities and I wanted to rebut HSBC and demonstrate in 40 words or less why he is full of baloney!
I got voicemail...
ONe more: watch the Spanish 10 year bond yields. They are pinned at 7.15%
Everytime they look like they are ready to dip, CNBC has some asshat on that says "things are ok in Euro-land"... and voilla! Back to the ceiling with higher yields.
Got in an online argument with a frenchie the other day. He told me I didn't know Europe and based on my knowledge of Europe, I porbably never spent a day in Europe. I then gave him my old postal address at the University of Parma in Italy when I lived there 4 out of 8 months in 1989. These french are on hallucinigenics and they are arrogant. He then tried to tell me that Europeans will all join in solidarity when the SHTF.
I informed him that they have joinded hand an hand to strangle the life out of Greece and that when Hollande really breaks the bank... ah well, remember Agincourt?
Zut allures, mon Ami!
Hollande and the Socialist dirty panty party have breathed new life into why we hate the french and why Germany, Italy, Spain and the UK will recall why they hate the french.
From now on: france will no longer be addressed with a Capital F.
I hate to say it, but we will probably see a civil war in Europe.
Ikaika..As Always well put.. 2things..First they wouldnt have put you to voice mail if you said you were the "chief" head of International Equities..and.. a Hiltler rant summed up the frogs with "cheese-eating surrender monkies".And that is that
Civil war would be consistent with my broader thesis about how the quest for "political stability" is actually a "short vol" trade.
They get a smoother political culture today in exchange for total political upheaval at some unknown point in the future.
But don't be so convinced. the French are impossible it's true, and if you treat them like their opinion is a serious thing then it can have you hoping to see them get a pounding.
(What's that joke... how many times do you have to march through the Arc De Triomphe with your hands in the air before you think about renaming the damned thing?)
I agree with Ikaika in regards to 'war in Europe'. I think it will start with Greece and maybe a few others descending into strongman / military dictatorship type governments amid a whole lot of chaos and violence. None of these strongmen will have the wisdom to turn things around. They will all be Hugo Chavez instead of Augusto Pinochet.
Germany should just insist on renaming the Euro to the "New Deutschmark". In the end, the only major economy that will be in the Euro will be Germany. Plus maybe a few small countries like Luxembourg, Lichtenstein, Estonia, etc.
Well - Greece will continue to implode. All the exterior meddling: the likes of which do not resemble sovereign politics within a union of nations (cough).
Archduke Franz Ferdinand anyone?
an example of a small potato in a small pond getting whacked and upsetting the "balance:.
if SHTF in Greece and someone of minute importance gets whacked, WWI all over again.
Someone in the EU will demand one of the member states to take action. A PG overseeing government coms in of Non-Greek to dictate to the parliament. HAHA!
and Tom: "how many times do you have to march through the Arc De Triomphe with your hands in the air before you think about renaming the damned thing?"
Brilliant!
Let's look at Spain... Rajoy might get carried out if the cost of borrowing continues to rip!
There are regions in SPain where they aretransacting in Pesetas. Si, Claro!
Spain can fragment into seperate regions. We may see a Spanish Civil War. Too many people on the outside bloviating over steak dinners and very expensive health food while the folks on the inside are waiting for a lifeline... not coming.
Spain can easily and readily split into 5 pieces. and then dominoes across the continent.
My only issue with the idea of thinking that 'civil war' is imminent is the fact that the Europeans lack a facility to even fight with each other. They have police, but the only real Army protecting Europe is wearing American uniforms. (I'm sure the Brits don't mind not being thought of as European in this context.)
There is no 'Baader Meinhof Complex' out there these days, just a bunch of whiny people who think paying their way should be someone elses responsibility. So I don't think Greek or even Spanish rioting ever leads to an actual shooting war. Children throw tantrums, not uprisings.
But if the Germans start rioting, then all bets are off. that would come from a completely different place and would be much more dangerous.
Tom:
{fixed an annoying typo, please delete earlier post}
I will disagree a bit that the Euros are too wimpy to get a real brawl going. The Euros have a lot of very violent Muslims and enough anarchist types to do some damage. That damage might trigger a much larger response. In particular, if the governments in question become completely inept at stopping the crime and violence.
I suspect that in a real SHTFM, native Europeans (at least enough of them that it will matter) will shake off decades of feminist-pacifist-socialist conditioning. The DNA of the West is being very good at war. In particular, total wars, that often end in the extermination of the enemy.
Respectfully, HELN... who... the Greeks( who haven't been a world power in 2200 years) the Spanish (who haven't really mattered since their Mexican gold mines played out)?
Muslims in Europe aren't going to stage uprising, they'll stage criminal conspiracies. Police can handle those. Their problem isn't will its ability. It takes more than what they have to overthrow a government.
It took Hitler over a decade to militarize, and he had nothing else to worry about. I'm not saying it's impossible forever, just that it's further off than it probably seems. Don't project your courage and determination onto a people who lack it themselves.
Oh they got guns, they just don't advertise. Espescially in Spain, Greece, Switzerland and in the ghettos of France. You could probably outfit an overthrow with a shopping trip in the french ghettos and a few thousand euros.
The other problem is that their military and homeland defense are all compulsory. They are not pros or voluntary in majority. The ranks are filled with people that are just as desperately impacted as the 'morte de fame'...
Also recall the bolshevieks took over an entire nation with limited firepower (similar situation?)
The young Soviet Union held-on (although sustaining enormous losses in Stalingrad) with rationed firearms and ammo. It was an accurate portrayal in the movie "Enemy at the Gates".
Sticks, stones, spears, petrol bombs, bulgarian ak's and tio's field guns can raise some real cain.
I don't see a pan european civil war, but I do see a martial law go into effect in crumbling economies, starting with Greece and Spain and then it's anyone's game.
Comparitively - hitler was preparing to take-on Europe.
A civil war in Spain or Greece would not neccessarily draw in Germany and Finland (contrary, Finland would probably stay out of it).
The road they are on has been paved over and over again. No denying. I don't invision a nation of people sitting on their hands and willingly starve to death.
the lefties lack the will (and the courage, and the plan) and the Muslims lack the organization. That's all I'm saying.
It will take longer than most expect for either deficiency to be addressed. Gang war is one thing, civil war is another. And it's not impossible that if a shooting war starts, they may inevitably be shooting at American soldiers.
They can keep an insurgency running for ages, but that's not how you overthrow a modern government.
With all that said, you have a point about Intra-spanish or Intra-greek uprising. But that may also be the opportunity the pan Europeans are waiting for. Nothing says "unification" like a muzzle in the face.
bada-bing!
Break out the RISK! board...
I'll set-up a base of operations down-under with fortifications in SE Asia... sit and wait while therest of you guys slug it out for Kamchatka and north america...
Interesting discussion, all. Anyone interested in Greek history should probably visit now, bacause kicking the can down the road isn't going to keep the Acropolis from burning. Listening to the Greek populace, I don't get the impression they are rolling up their sleeves to work.
Agree that things may get a bit out of hand elsewhere (Spain has their Basque and Catalonians for example...) but can be contained.
Tom's thought of Germans hitting the streets took me off guard, as I haven't ever imagined the Germans not being united. If you are referencing the enormous Muslim population in Germany getting restless, then I get it. But the German police force is equipped to counter that, and they would have the imprimatur of thevGerman people to do so.
"But the German police force is equipped to counter that, and they would have the imprimatur of the German people to do so. "
Boy no kidding huh? My brother hasn't been to Germany since the end of the cold war (when he was there with the Army) and he still talks about how the German police handled "public disturbances". Whack a whack a whack a whack a whack, and sort out who is who n the emergency room.
The Germans are fairly unified, but their politicians are going to have to do things that the people won't like, and the 'the people' might be a little annoyed when they find out how little they can actually influence those decisions.
It will all be veiled in some legal mumbo jumbo like ("deemed as passed") etc. But it still won't be popular.
the Islamic community will sit back and watch the infidels waste eachother. That's why they vote democrat. They really abhore abortion and entitlemets and encroachement into religion, but give the infidel exactly what the infidel wants and everything else will fall into place.
The Acropolis and the Parthenon might be corporate owned like Ballparks in the US.
"The Verizon Acropolis"
The HUmana Parthenon"
Are you guys... like... serious?!?
:O ...
http://www.dailymail.co.uk/news/article-2054913/Europe-war-2018-As-Angela-Merkel-says-euro-meltdown-spark-battle.html
Post a Comment