Apr 13

The Entire Economy Is a Ponzi Scheme (ZeroHedge, April 13, 2013):

Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky, the Wall Street Journal and many others say that our entire economy is a Ponzi scheme.

Former Reagan budget director David Stockman just agreed:


YouTube Added: 10.04.2013

So did a top Russian con artist and mathematician.

Even the New York Times’ business page asked, “Was [the] whole economy a Ponzi scheme?

In fact – as we’ve noted for 4 years (and here and here) – the banking system is entirely insolvent. And so are most countries. The whole notion of one country bailing out another country is a farce at this point. The whole system is insolvent.

As we noted last year: Continue reading »

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Nov 21

The Latest Greek “Bailout” In A Nutshell: AAA-Rated Euro Countries To Fund Massive Hedge Fund Profits (ZeroHedge, Nov 21, 2012):

With constantly changing variables in what will be the fourth and not final Greek bailout, it has been relatively difficult to pinpoint just what the “fulcrum security” is in the ongoing restructuring that is not really a cramdown bankruptcy but kinda, sorta is, and more importantly where the money will come from. A big issue that Europe has discovered with a two and a half year delay (pointed out here first, but anyone with capacity for rational thought could have grasped it at the time), is that Greece has hit the inflection point where without more, and substantial, debt forgiveness it is unviable entity, and will certainly not hike the Troika’s hard line target of 120% debt/GDP by 2020. In other words, Greece can no longer layer more debt to pay down debt. Continue reading »

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Nov 17

Kyle Bass: Fallacies Such As MMT Are “Leading The Sheep To Slaughter” And “We Believe War Is Inevitable” (ZeroHedge, Nov 17, 2012):

Below are some of the key highlights from Kyle Bass’ latest, and as usual, must read letter:

On central banks and the final round of global monetary debasement:

Central bankers are feverishly attempting to create their own new world: a utopia in which debts are never restructured, and there are no consequences for fiscal profligacy, i.e. no atonement for prior sins. They have created Potemkin villages on a Jurassic scale. The sum total of the volatility they are attempting to suppress will be less than the eventual volatility encountered when their schemes stop working. Most refer to comments like this as heresy against the orthodoxy of economic thought. We have a hard time understanding how the current situation ends any way other than a massive loss of wealth and purchasing power through default, inflation or both. Continue reading »

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Nov 03

Friday Humor: The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows (ZeroHedge, Nov 2, 2012):

From the ECB’s Virtual Currency Schemes, aka the “Bash Bitcoin Boondoggle” (p. 27):

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity

Considering that this elucidation comes from the very same entity that launched the SMP, LTRO, OMT, EFSF, ESM, oh, and of course, TARGET2, and whose head said to not short the EUR as there is “no risk” whatsoever in holding said currency, one would expect that this definition is absolutely spot on…

* * *

And as an added bonus, here is the part in which the ECB appears to be so worried about BitCoin taking over as legitimate “legal tender” from the EUR (which the ECB’s Coeure said two days ago is as “solid and longlasting as a diamond”) it dedicated an entire report to bash the recently conceived electronic currency: Continue reading »

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Sep 24


German TRAITOR Finance Minister Wolfgang Schäuble is in favor of leveraging the ESM. Here, during his 70th birthday celebrations last week.

Up to Two Trillion: Europe Plans to Leverage Euro-Zone Bailout Fund (Spiegel, Sep 24, 2012):

Officially, the ESM permanent euro-zone bailout fund is worth 500 billion euros. That, though, might not be enough, which is why euro-zone governments are now planning to introduce levers that could mobilize up to 2trillion euros, SPIEGEL has learned. Finland, though, is skeptical of the idea.

With the launch of the permanent common-currency bailout fund, the European Stability Mechanism (ESM), just around the corner, euro-zone member states are looking into ways to leverage the €500 billion ($647 billion) available to the fund, SPIEGEL has learned. But with Finland still concerned about the leveraging plans, it is unlikely that they will be initially included when the ESM is launched on Oct. 8.

The plan envisions the continuation of leverage instruments currently in use in the temporary euro bailout fund, the European Financial Stability Facility (EFSF). Should they be applied to the ESM, the permanent fund could be able to mobilize up to €2 trillion instead of the €500 billion lending capacity it currently has — a size that would make it easier to provide emergency aid to countries as large as Spain and Italy, for example.


Google translation (Original article in German down below.):

Quadrupling of the euro rescue fund: ESM should be leveraged to two trillion euros (Focus, Sep 24, 2012):

The euro countries prepare before one allegedly leverage the ESM permanent bailout fund. To save even large countries like Spain and Italy, as opposed to its planned 500 billion euros will be available two trillion euros.

Whether to increase the financial cushion reported the news magazine “Der Spiegel” on Monday. Model for the leverage of aid accordingly, the provisions of the predecessor fund EFSF. There are two tools in which the bailout fund with public money can only take on the most risky parts. The rest of the money will come from private investors, which must go into limited risk. However, the concept was the EFSF not apply because there are no private investors found.

Continue reading »

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Sep 08

Commentary:

In case some of you still think that politicians and central banksters won’t lie to you:

Flashback: Quotes from the Great Depression

In other news:

Financial Markets Cheer The Death Of The Bundesbank (Welt, Sep 6, 2012) – Bundesbank Text: Weidmann Reiterated Bond-Buy Criticism

Hyper Mario Draghi: ‘Euro Is Irreversible’ – ECB Announces Sweeping Program For Buying Bonds, Giving The Bank Potentially Unprecedented Power

The ESM Violates The Law And EU Treaties (Welt, Sep 4, 2012)

War Is Peace!

… and …

Printing Money (QE) Is Saving The Euro!

Quantitative easing (QE) = printing money = creating money out of thin air = increasing the money supply = inflation = hidden tax on monetary assets = theft!

The ECB will just delay the coming (necessary) collapse for a while. This will be EXTREMELY beneficial for the elitists and the banksters …

… and the middle class and the poor will be totally and utterly destroyed:

“When a country embarks on deficit financing and inflationism you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

Here is, AGAIN, where elite puppet Draghi is coming from:

Mario Draghi (Wikipedia):

Draghi was then vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002–2005). A controversy existed on his duties while employed at Goldman Sachs. Pascal Canfin (MEP) asserted Draghi was involved in swaps for European governments, namely Greece, trying to disguise their countries’ economic status.

The ECB will have to monetize TRILLIONS of bad debt!!!


Got physical gold, silver and a remote farm (food, water, etc.)?


Central bank governor Mario Draghi overcomes Germany’s fears over inflation to announce new intervention in debt markets


ECB president Mario Draghi was careful to address German objections in his presentation of the unlimited bond-buying policy. Photograph: Alex Domanski/Reuters

ECB introduces unlimited bond-buying in boldest attempt yet to end euro crisis (Guardian, Sep 6, 2012):

The European Central Bank (ECB) unveiled its boldest attempt yet to stabilise the battered single currency on Thursday when its president, Mario Draghi, announced a new programme of open-ended, unlimited buying of distressed government bonds.

The scheme is aimed at depressing the costs of borrowing for Spain and Italy and countering the risks of a fragmentation of the eurozone and the unravelling of the single currency.

But Draghi also set strict terms for triggering the bond-buying programme, putting pressure on the eurozone’s political leaders to request help, enter austerity programmes, and agree on direct bailouts for struggling governments before the ECB will act.

Draghi brushed aside strong resistance from Germany’s powerful Bundesbank, which lodged the only vote against the new policy in the ECB’s 23-strong governing council, to come good on his pledge in London six weeks ago that the central bank would do “whatever it takes” to save the euro.

Continue reading »

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Sep 07

“Spain Requests Bailout On September 14” – Goldman’s Definitive Post-Mortem On Europe’s Third Bond Buying Attempt (ZeroHedge, Sep 6, 2012):

Yesterday, when Bloomberg leaked every single detail of today’s ECB announcement, which thus means today’s conference was not a surprise at all, yet the market sure would like to make itself believe it was, we noted that everything that was leaked, and today confirmed, came from a Goldman memorandum issued hours before. Simply said everything that happens at the ECB gets its marching orders somewhere within the tentacular empire headquartered at 200 West. Which is why when it comes to the definitive summary of what “happened” today, we go to the firm that pre-ordained today’s events weeks ago. Goldman Sachs.Perhaps the most important part is this: “September 13-14: Spain to make formal request for EFSF support at the Eurogroup meeting. With a large (and uncovered) redemption looming at the end of October (and under pressure from other Euro area governments), we expect Spain to move towards seeking support.” In other words, Rajoy has one more week before he is sacked and the Spanish festivities begin. Continue reading »

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Aug 12

Sep. 12 (Bundesverfassungsgericht ruling on the ESM) is the date to watch!!!

Let’s see if Germany walks its talk, because that would mean the end of the euro.

Got physical gold and silver?

See also:

Greece Now Prints It’s Own Euros, The ECB Approves, The Bundesbank Nods: No One Wants To Get Blamed For Kicking Greece Out


Germany Has “Reached Its Limit” On Greek Aid (ZeroHedge, Aug 11, 2012):

While Frau Merkel remains beach-bound somewhere, hence the lack of ‘Neins’ recently, her deputy chancellor Michael Fuchs made it unequivocally clear this morning in a Handelsblatt interview that Germany had “reached the limit of its capacity” over additional EFSF payments to Greece and reiterated the double-whammy that the ESM should NOT receive a banking license and that the ECB should NOT act as “money printing press in disguise” by extending emergency loans and bypassing EFSF/ESM. A decision about whether Greece should be given the second tranche of its loan will not be made until October, after the Troika finalizes its first review of the second rescue program in September. However, BNP Paribas notes that there have been a couple of developments worth noting over the past week and more are likely in the coming weeks. Continue reading »

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Aug 04

In Order To Be Saved, Spain And Italy Must First Be Destroyed (ZeroHedge, Aug 4, 2012)

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Jul 30

Eurogroup Head Confirms “It Has Become Serious”, As He Is Back To Lying (ZeroHedge, July 30, 2012):

The insolvent banana continent is back. Recall back in May 2011:

When it becomes serious, you have to lie.” Jean Claude Juncker

Ergo, things in Europe are very serious again because the Eurogroup’s head, who until recently promised he was quitting his post because “he had gotten tired of the Franco-German interference in managing the region’s debt crisis”, only to spoil the fun and say he was lying about that too, is back to doing what he does best – lying. To wit: “the euro countries are preparing together with the bailout fund EFSF and the European Central Bank to buy government bonds if necessary clip euro countries.” And now cue Schauble: “Federal Finance Minister Wolfgang Schaeuble has rejected speculation about impending purchases of government bonds by Spanish EFSF and ECB.”

From Suddeutsche Zeitung:

“No time to lose”: The chairman of the €-group sees a crucial point of the debt crisis has arrived. Jean-Claude Juncker supports plans by ECB chief Draghi for the purchase of government bonds – and Germany are partly to blame for the crisis. Berlin treats the euro area “as a branch.” Also called “chatter on the withdrawal of Greece” is not helpful.

Juncker confirmed that the euro countries are preparing together with the bailout fund EFSF and the European Central Bank to buy government bonds if necessary clip euro countries. Because there is no doubt, he said. “It is still necessary to decide exactly what we will do and when.” This depended “on the developments of the next few days and from reacting as fast as we need.”

And to think only yesterday the only person whose opinion matters, Germany’s Finance Minister,  “denied plans for a new aid program for Spain, according to newspaper Welt am Sonntag, after the media reported European Union leaders aim for Spanish government bond purchases by the European rescue fund and the European Central Bank.”

We leave it up to readers to figure out which of the above two is telling the truth, but in the meantime, here are some other soundbites from the man who is back to desperation pleading with markets: Continue reading »

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Jul 12

Dummies Guide To Europe’s Ever-Increasing Jumble Of Acronyms (ZeroHedge, July 12, 2012):

It seems every week there are new acronyms or catchy-phrases for Europe’s Rescue and Fiscal Progress decisions. Goldman Sachs provides a quick primer on everything from ELA to EFSM and from Two-Pack (not Tupac) to the Four Presidents’ Report.

Rescue Programs

EFSF
European Financial Stability Facility. A temporary special purpose vehicle financed by members of the euro area to address the European sovereign debt crisis by providing financial assistance to euro area states in economic difficulty. The ESFS can issue bonds or other debt instruments in the market to raise funds needed to provide loans to euro area countries under financial stress, recapitalize banks (through loans to governments) or buy sovereign debt; these bonds are guaranteed by the Euro area member states. Euro area member states’ capital guarantees total €780 billion and the facility has a lending capacity of €440 billion. Since it began operations in August 2010, money has been lent to Ireland, Portugal, and Greece and is in the process of being lent to Spain and Cyprus.

EFSM
European Financial Stabilization Mechanism. An emergency funding program for EU member states in economic difficulty, which is reliant on funds raised in the financial markets and guaranteed by the European Commission (EC) using the budget of the European Union as collateral. The fund has the authority to raise up to €60 billion and has made loans to Ireland and Portugal (in conjunction with the European Financial Stability Facility (EFSF) since its May 2010 inception. Continue reading »

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Jul 07

Spain’s Not Getting a Bailout… Neither is Italy… It’s the END GAME Folks (ZeroHedge, July 7, 2012):

Spain got a “bailout” or so the media claimed. Because I cannot find any entity in Europe with the funds to actually bailout Spain (the EUFN is tapped out, the ESM has major political issues, and Germany is risking a credit downgrade and insolvency based on its backdoor EU props).

As one would expect in this situation, things are rapidly going into hyper-drive in Spain. The weekend before last the country implemented capital controls including

  • A minimum fine of  €10,000 for taxpayers who do not report their foreign accounts.
  • Secondary fines of  €5,000 for each additional account
  • No cash transactions greater than €2,500
  • Cash transaction restrictions apply to individuals and businesses

Does this sound like the actions of an economy with a sound banking system?

On a related note, Italy is once again back on the brink: in the last 2 weeks Italy’s Prime Minister Mario Monti has said that the country is “flirting with economic disaster… [and] in a crisis.” He, like Spain’s PM Rajoy, has pushed for the ESM to buy sovereign bonds. He’s also asked the ECB to implement a mechanism through which it would buy Italian sovereign bonds whenever the spread between them and German bunds grows too large (a type of bailout).

Indeed, things are so desperate that he invited German Chancellor Angela Merkel, French President Francois Hollande, and Spanish Prime Minister Mariano Rajoy to an emergency meeting in Rome over the weekend. His goal was to convince EU leaders to allow Italy to receive funding directly from the EFSF and ESM.

The ECB and Germany have already rebuked this idea: Continue reading »

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Jun 20

And Now We Ramp On This Latest Non-News (ZeroHedge, June 20, 2012):

This is just getting ridiculous:

  • MERKEL SAYS BOND PURCHASING BY BAILOUT FUND A POSSIBILITY

Uhm… that whole point of the bailout fund (ESM/EFSF) is to BUY BONDS. Basically Merkel just confirmed that the whole point of the ESM, which by the way still does not exist, and whose sole purpose is to buy bonds… is to buy bonds. You can’t make this up. Yes they will subordinate existing bondholders in the case of ESM, and in the case of EFSF Finland and soon Germany will demand collateral via negative pledges (as in the case of Spain – or did the market forget all about that already), but apparently that is now merely an irrelevant detail. And the EURUSD ramps on this, once again proving that nobody has any idea what is going on in the market but flashing red healines = usually good.

From the ECB itself:

esm

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Jun 13

See also:

Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further (Full Text)

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video)


Spanish bond yields at record high as Fitch downgrades 18 banks and financial contagion spreads to Italy (Independent, June 12, 2012):

Spain’s borrowing costs soared to their highest levels since the introduction of the single currency in 1999 today, as any confidence investors might have taken from Madrid’s weekend pledge to seek a bailout for its toxic banking sector drained away.

Yields on the country’s 10 year bonds shot up to 6.8 per cent this afternoon as investors frantically dumped their holdings of Spanish debt, before falling back to 6.72 per cent.

The credit rating agency Fitch added fuel to the flames of alarm by downgrading 18 Spanish banks, following its downgrade of Madrid’s sovereign debt to BBB last month. Among the Spanish lenders cut were Bankia, CaixaBank, and Banco Popular Espanol, with Fitch blaming the weakening Spanish economy, which is forecast to contract by 1.7 per cent this year and to remain in recession well into next year.

Continue reading »

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Jun 13

Don’t miss:

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video):


Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further – Full Text (ZeroHedge, June 13, 2012):

And so the final Spanish A rating tumbles. Why is this kinda, sorta a big deal? Because as we explained in the end of April, “If all agencies downgrade Spain to BBB+ or below, the ECB could increase haircuts by 5% on SPGBs. The key aspect in terms of the Spanish downgrade(s) is the ECB’s LTRO. If all three rating agencies move Spain to BBB+ or below then under the ECB’s current framework it moves into the Step 3 collateral bucket which requires an additional 5% haircut across the maturities. In classifying its risk management buckets, the ECB uses the highest of the ratings to determine an asset’s position (unlike the sovereign benchmark indices which use the lowest rating, in general). Fitch and Moodys currently rate Spain at A and A3 respectively, with both having a negative outlook in place leaving only a small downgrade margin before Spain migrates to the lower ECB bucket.”

And now the collateral squeeze is on, unless of course the ECB changes the reules one more time. Continue reading »

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Jun 11

Spain’s Euro Bailout Might Boost Markets Tomorrow But Don’t be Fooled (Forbes, June 10, 2012):

Will Spain’s bailout boost the markets on Monday? As Abram Brown points out the markets are eager for good news. But there are serious question marks over the bail out. Not least that the Spanish can’t seem to agree on what they have agreed to. And Euro zone members don’t actually know how they are going to pull off this refinancing.

What they believe they have done is create a plan that will ward off contagion if the Greek election goes against the pro-austerity parties Monday week. That might be unraveling already, as Spaniards take to the streets to protest against the deal. Add in to the mix, skepticism about the size of the rescue – $125 billion is just not enough some analysts are saying. The real figure is at least double that.

Continue reading »

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Jun 10

Spain IS Greece After All: Here Are The Main Outstanding Items Following The Spanish Bailout (ZeroHedge, June 9, 2012):

After two years of denials, we finally have the right answer: Spain IS Greece. Only much bigger (it is also the US, although while the US TARP was $700 billion or 5% of then GDP, the just announced Spanish tarp is 10% of Spanish GDP, so technically Spain is 2x the US). So now that the European bailout has moved from Greece, Ireland and Portugal on to the big one, Spain, here are the key outstanding questions.

1. Where will the money come from?

De Guindos, Schauble and the Eurogroup, all announced that the sole source of cash would be the ESM and/or the EFSF. The problem with this is that the ESM has yet to be ratified by Germany, whose parliament said previously it is sternly against allowing the ESM to fund a direct bank bailout, something which just happened. Thus, the successful German ESM ratification vote, whenever it comes, and which previously was taken for granted, now appears to be far more questionable.

Which leaves the EFSF. The problem with the EFSF is that there is about €200 billion in dry powder. And this includes the Spanish quota of €93 billion, which we can only assume is now officially scrapped.

Which brings us to a bigger question: now that Spain is officially to be bailed out, what happens next. And by that we mean of course the big one: Italy. Recall that as we posted in Brussels… We Have A Problem, once the contagion spreads again to Italy, and that country also needs a bailout, it is game over. From the world’s biggest hedge fund Bridgewater: Continue reading »

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Mar 29

EU – EFSF & ESM – A Whole Lot Of Nothing (ZeroHedge, Mar 28, 2012):

A quick look at the headlines:

€200 billion already committed. So the EFSF has already committed €200 billion.  So far I only see €63 billion of debt issued by the EFSF, so they have at least another €137 billion to fund.  The bulk of their issuance so far is back to back with a they made to Greece, hardly the best collateral.  For now I’m going to assume that there is no overcollateralization requirement and just €200 billion has been committed, but if the 165% overcollateralization is in place, then that would really be €300 billion of “guarantees” used up. Continue reading »

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Mar 29

– Eurozone finance ministers must raise ONE TRILLION euro bailout for the ‘mother of all firewalls’ says OECD chief (Daily Mail, Mar 27, 2012):

The eurozone bailout fund should be increased to 1 trillion euros to provide ‘the mother of all firewalls’, the head of a leading international development body said today.

Angel Gurria, the secretary general of the Organization for Economic Co-operation and Development (OECD), said eurozone finance ministers need to impress finance markets with the size of their rescue fund for indebted countries when they meet later this week.

Continue reading »

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Feb 12

The Cost Of The Combined Greek Bailout Just Rose To €320 Billion In Secured Debt, Or 136% Of Greek GDP (ZeroHedge, Feb. 2, 2012):

Some of our German readers may be laboring under the impression that following the €110 billion first Greek bailout agreed upon and executed in May 2010, the second Greek bailout would cost a “mere” €130 billion. Alas we have news for you – as of this morning, the formal cost of rescuing Greece for the adjusted adjusted adjusted second time has just risen to €145 billion, €175 billion, a whopping €210 billion, bringing the total explicit cost of all Greek bailout funds to date (and many more in store) to €320 billion. Which incidentally is a little more than Greek GDP (which however is declining rapidly) at 310 billion, only in dollars. So as of today, merely the ratio of the Greek DIP loan (Debtor In Possession, because Greece is after all broke) has reached a whopping ratio of 136% Debt to GDP. This excludes any standing debt which is for all intents and purposes worthless. This is secured debt, which means that if every dollar in assets generating one dollar in GDP were to be liquidated and Greece sold off entirely in part or whole to Goldman Sachs et al, there would still be a 36% shortfall to the Troika, EFSF, ECB and whoever else funds the DIP loan (i.e., European and US taxpayers)! Another way of putting this disturbing fact is that global bankers now have a priming lien on 136% of Greek GDP – the entire country and then some now officially belongs to the world banking syndicate. Consider that when evaluating Greek promises of reducing total debt to GDP to 120% in 2020, as it would mean wiping all existing “pre-petition debt” and paying off some of the DIP. Also keep in mind that Greece has roughly €240 billion in existing pre-petition debt, of which much will remain untouched as it is not held in Private hands (this is the debt which will see a major “haircut” – or not: all depends on the holdout lawsuits, the local vs non-local bonds and various other nuances discussed here). If you said this is beyond idiotic, you are right. It is not the impairment on the Greek “pre-petition’ debt that the market should be worried about – that clearly is 100% wiped out. It is how much the Troika DIP will have to charge off when the Greek 363 asset sale finally comes. This is also what Angela Merkel will say tomorrow when Greece shows up on its doorstep with the latest “revised” agreement from its parliament to take Europe’s money ahead of the March 20 D-Day. Because finally, after months (and to think we did the math for Die Frau back in July) Germany has done the math, and has reached the conclusion that letting Greece go is now the cheaper option.

So how do we get to the €210 billion number? Well, there is the €130 billion already “agreed” upon. Continue reading »

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Jan 16

See also:

Gerald Celente: ‘Politics Is Show Business For The Ugly’ – Expects Europe To Collpase In April – On The NDAA And Indefinite Detention: ‘They Can Simply Blow My Brains Out Now’ … ‘This Is FASCISM’


S&P Downgrades EFSF From AAA To AA+, May Cut More If Sovereign Downgrades Continue (ZeroHedge, Jan. 16, 2012):

And so the latest inevitable outcome of the French downgrade from AAA has arrived, after the S&P just downgraded the EFSF, that pillar of European stability, from AAA to AA+. S&P adds: “if we were to conclude that sufficient offsetting credit enhancements are, in our opinion, not likely to be forthcoming, we would likely change the outlook to negative to mirror the negative outlooks of France and Austria. Under those circumstances we would expect to lower the ratings on the EFSF if we lowered the long-term sovereign credit ratings on the EFSF’s ‘AAA’ or ‘AA+’ rated members to below ‘AA+‘.” In other words, as everyone but Europe apparently knew, the EFSF is only as strong as the rating of its weakest member. And now the rhetoric on how AAA is not really necessary for the EFSF, begins, to be followed by AA, next A, then BBB and finally how as long as the EFSF is not D-rated all is well.

From S&P: Continue reading »

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Dec 01

Flashback:

University of Texas Takes Delivery Of $1 Billion In Gold Bars After Cue From Hedge Fund Manager Kyle Bass, Storing It In New York Vault


Of Imminent Defaults And Self Deception. Kyle Bass Prepares For The Worst (ZeroHedge, Nov. 30, 2011):

In his latest letter to LPs, Kyle Bass of Hayman Capital Management, offers his tell-tale clarity on what may lie ahead for Europe and Japan. With his over-arching thesis of debt saturation becoming more plain to see around every corner, Bass bundles the simple (and somewhat unarguable) facts of quantitative analysis with a qualitative perspective on the cruel self-deception that we all see and read every day about Europe.

Whether it is Kahneman’s “availability heuristic” (wherein participants assess the probability of an event based on whether relevant examples are cognitively “available”), the Pavlovian pro-cyclicality of thought, or the extraordinary delusions of groupthink, investors in today’s sovereign debt markets can’t seem to envision the consequences of a default.

His Japanese scenario is no less convicted, as we have discussed a number of times, with the accelerant of this debt-bomb being the very-same European debacle and his time-frame for this is set to begin in the next few months.

Hayman_Nov2011

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Nov 13

EFSF Denies It Is An Illegal Pyramid Scheme (ZeroHedge, Nov. 13, 2011):

If there is one thing one can say about the insolvent European continent is that despite everything, it is a bastion of truth, and a knight of see-thru disclosure. After all, who can forget such brutally honest statements as “Greece will not default“, or the follow ups: “Ireland is not Greece”, “Portugal is not Ireland”, “Spain is not Portugal”, “Italy is fine”, “Italy has turned down money from the IMF“, “The IMF has never offered any money to Italy“, and then the old standbys, “the ECB will not be a lender of last resort”, “the EFSF will use 4-5x leverage“, wait, make that “the EFSF will use 3-4x leverage“, and last but not least, “Europe is not America” and “it is all the fault of evil CDS speculators.” Well we have one more to add to the list: “the EFSF is not an illegal ponzi scheme” – because after the mindboggling report in the Telegraph yesterday that the EFSF has bought hundreds of millions of its own bonds, exposing the scam in the heart of the Eurozone for anyone to see, the European rescuer of last resort (at least until the ECB comes out monetizing and Eurobonds are issued)has no choice but to join in the parade of truths and as Reuters reports “said on Sunday that it did not buy its own bonds last week, denying a British newspaper report that it spent more than 100 million euros ($137 million) to cover a shortfall of demand. “The EFSF did not buy its own bonds and the book was 3 billion euros,” an EFSF spokesman said, referring to the 3 billion euros raised in last Monday’s 10-year bond issue.” We are certain that in order to dispel rumors about its fraud-i-ness, the EFSF will promptly submit a full breakdown of the entities that received bond allocations (we know that Japan is good for €300 million, that China is good for €0.0, and that as Merkel said one week ago, “hardly any countries in G20 have said they will participate in the EFSF.So, because we believe everything that comes out of Europe, we are patiently waiting to see just who it was that bought EFSF bonds when nobody else did. And yet what is most troubling to us, is that it took the world 5 minutes to completely agree that the EFSF is a ponzi scheme, with nobody doubting this supposedly “refuted” disclosure for even a second. Perhaps that tells you more about the current state of Europe than anything else…

– Full article here:  The Euro Is Dead (ZeroHedge, Nov. 13, 2011):

The ‘tragedy of the commons’ or ‘free-rider’ dilemma of game theoretical cocktail parties is a great framework for considering the current tug-of-war between individual sovereign fiscal actions among the European Union and the over-arching monetary policy of the ECB. If the ECB is dovish and too many states decide to suckle on the teat of liquidity – as opposed to fiscally ‘behave’ – then everyone loses (as we see currently evolving). The lack of any Nash (stable and dominant) equilibrium among the European nations and their hoped-for benefactor is becoming increasingly problematic for both trading and business investment.

Nomura’s Global Macro Strategy group tackle the problem that is now abundantly clear the euro area as currently constructed is not stable and so it will have to change (hence, the Euro is dead!). The direction of travel is being set out by northern European politicians and is worth noting – more Union not less. But two points are critical to note; first that the new euro area may be so different from the one the current members signed up to as to make a process of voluntary re-application for euro stage II necessary to determine future membership, and second that any new variable geometry euro will take a long period of time to set up. How then to cover the intervening period?

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Nov 07

In Act of Desperation, G20 Asks Germany to Pledge its Gold for EFSF Rescue Fund, Bundesbank Refuses; Grateful for the Arrogance (Global Economic Analysis, November 06, 2011):

The gall and arrogance of the G20 and Euro-nanny finance minister clowns is staggering.

German newspapers report that the G20 discussed asking Germany to pledge its gold to bail out Greece and the Piigs, and to fund the EFSF.

The Bundesbank, Germany’s central bank said “We know this plan and we reject it.”

One might think that would be enough to stop such idiotic talk, but one would be wrong. In spite of Bundesbank opposition, euro zone finance ministers will discuss the idea next week.

Please consider Bundesbank: central bank reserves will not help fund EFSF

The Frankfurter Allgemeine Sonntagszeitung (FAS) reported that Bundesbank reserves — including foreign currency and gold — would be used to increase Germany’s contribution to the crisis fund, the European Financial Stability Facility (EFSF) by more than 15 billion euros ($20 billion).

The European Central Bank (ECB) would own the reserves, according to the paper, citing sources at the G20 meeting held in Cannes this week.

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Oct 03

And if Wolfgang Schäuble (or any other politician) says so, then it surely means NOTHING:

The Dangerous Subversion Of Germany’s Democracy (Telegraph) – Wolfgang Schäuble’s Lies Exposed

Prepare for collapse. Got physical gold and silver? (BTFD!)


Germany ‘won’t give more to EU bail-out fund’ (AFP, Oct. 1, 2011):

German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday.

“The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished,” he told the magazine Super-Illu.

He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.

“Then it will be only a matter of 190 billion in total, for which we will be guarantors, including interest,” he explained.

Germany’s lower house of parliament, the Bundestag, on Thursday approved the beefing up of the eurozone bailout fund, which cleared its final hurdle on Friday when it was rubber-stamped by the Bundesrat (upper house).

The vote had been seen as a crucial test of Chancellor Angela Merkel’s authority amid fears of a backbench rebellion. However she secured an overwhelming majority of her own deputies to back the move.

A majority of Germans (58%) consider it was a mistake to boost the EFSF, according to a poll to be published Sunday in the weekly Bild am Sonntag.

(As if ‘Bild am Sonntag’ readers would know anything about economics and politics.)

Schaeuble rules out larger German EFSF contribution (Reuters, Oct. 1, 2011):

Oct 1 (Reuters) – Finance Minister Wolfgang Schaeuble was quoted on Saturday ruling out a higher German contribution to the euro zone’s rescue fund beyond the 211 billion euros approved by parliament last week.

In an interview with the Super-Illu newspaper published on Saturday, Schaeuble said Germany would not contribute more than that amount to the 440 billion euro European Financial Stability Facility (EFSF).

“Germany will take on 211 billion euros in guarantees and that’s it, that’s really the end of it with the exception of the interest costs on top of it,” said Schaeuble, who has faced criticism recently for revising upwards earlier pledges on ceilings for the guarantees.

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Oct 01

Germany must hit the eject button (Stratfor via Business Spectator, Sep 30, 2011):

The eurozone’s financial crisis has entered its 19th month. There are more plans to modify the European system than there are eurozone members, but most of these plans ignore constraints faced by Germany, the one country in the eurozone in a position to resolve the crisis. Stratfor sees only one way forward that would allow the eurozone to survive.

Germany’s constraints

Most of these plans ignore that Germany’s reasons for participating in the eurozone are not purely economic, and those non-economic motivations greatly limit Berlin’s options for changing the eurozone.

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Sep 29

From the article:

‘Mr Schäuble has now been forced to give a categorical assurance that the EFSF will not be expanded. He cannot break his word without very serious consequences, or before the financial crisis turns deadly.’

As for the assurances of Mr Schäuble, either he really is lying, in which case there will be all Hell to pay in the Bundestag, and most likely a massive political backlash that will change German politics profoundly.

Or he is not lying, in which case there is no plan to save the eurozone, and we therefore face the mounting risk of a spiral into a banking crash, serial sovereign defaults, and a disorderly break-up of EMU.

Not pretty.

I bet Mr. Schäuble lied (again), but here is why the plan to save the eurozone is doomed to fail:

The Multi-Trillion Euro Bailout Plan Has Already FAILED

Wolfgang Schäuble’s lies exposed:

In December 2009 Schäuble said that the Germans cannot pay for the problems of Greece.

In April 2010 he said that Greece may not need a bailout.

In May 2010 he promised his people the € 110 Billion bailout to be a one-time grant and the absolute upper limit of payments.

In May 2011 he agreed to the € 750 Billion bailout package.

In June 2011 Greece got another € 100 Billion bailout, again with approval from Mr. Schäuble.

Finance minister Wolfgang Schäuble is not only a LIAR, but a TRAITOR unto his people.

The elite puppet governments in Europe and in the US do exactly what they are told by their masters.

This is the greatest looting of the people in world history orchestrated by the elitists.

Europe is already burning (and so is the US).

Prepare for currency reform(s) and the greatest financial collapse in world history.

This is the ‘Greatest Depression’.

Got physical gold and silver (…and food and water supplies)?


The Dangerous Subversion Of Germany’s Democracy


The Bundestag and the German people are being undermined

The dangerous subversion of Germany’s democracy (Telegraph, Sep. 29, 2011):

Optimism over Europe’s “grand plan” to shore up EMU was widely said to be the cause of yesterday’s torrid rally on global markets, lifting the CAC, DAX, Dow, crude and copper altogether.

This is interesting, since Germany’s finance minister Wolfgang Schäuble has given an iron-clad assurance to the Bundestag that no such plan exists and that Germany will not support any attempt to “leverage” the EU’s €440bn bail-out plan to €2 trillion, or any other sum.

“I don’t understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense.”

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