From Madrid to Mexico
Spanish borrowing costs rose above the notionally unsustainable 7% mark as the ‘pro-European’ result of the Greek election failed to calm markets. Spain appeared to be on the brink of requiring a global bailout, according to the Telegraph.
Herman von Rompuy and Jose Manuel Barroso joined the G20 in Mexico, where Barroso promptly declared that “we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy”. However, if he did not expect advice, he clearly expected money.
However, the EU president also called on G20 countries to make clear how much they are willing to contribute to a $430bn firewall designed to contain Europe’s crisis …
“We ask those G20 countries to be clear on their pledges,” said Mr Van Rompuy.
Spain, which was struggling to borrow money on the bond markets, “called on the European Central Bank to prop up the nation’s bond market as yields surged beyond the 7 percent level that prompted bailouts in other euro nations.” Spanish Budget Minister Cristobal Montoro said:
“The ECB should respond with all firmness,” Montoro told lawmakers in the Senate in Madrid today, echoing a call made by other members of the government. Doubts that remain about the currency region that need to be eliminated, he said.
As if on cue Barroso told G20 leaders ‘that a way needed to be found to provide direct support to Europe’s banks rather than lending to governments so they can recapitalize distressed lenders.’
No decisions are expected at that meeting, but it may agree that Herman Van Rompuy, the president of the European Council, should draw up a more detailed blueprint for how the EU can set up a banking union and move closer to a fiscal union in the coming years, which would help combat the debt crisis.
“Priority is given to banking integration and in the bank integration, I think we can reach, sooner than in other matters, an agreement on a more centralized and more common supervision,” Van Rompuy told a news conference, speaking alongside Barroso.
“The timeline depends on the legal framework under which we have to work. We can do a lot in the current treaties, the framework of the current treaties. If we go beyond this, it takes of course much more time,” he said.
The Wall Street Journal describes the other steps the EU is taking to get ahead of the crisis by expanding the power of Brussels. The theory appears to be that if Europe can build a big enough political institution then it can solve its financial troubles. In the view of the bureaucrats, “Europe” is in a race to see whether it can extend its treaty connections quickly enough to head off a meltdown.
Things are one step closer to the scenario envisioned by former Italian prime minister Silvio Berlusconi. He believed the European Central Bank should print money.
Barroso’s desire for a new approach may mean that the European Central Bank’s program of quantitative easing has not been working, at least sufficiently, to save the banks. In February, the ECB released a trillion euros in 1% bonds as part of its “campaign to stabilise the euro, forestall a new credit crunch and shore up troubled banks by flooding the markets with hundreds of billions’ worth of easy money for the second time in two months.” At the time it was seen as a “masterstroke” of ECB president Mario Draghi. But it has failed to save Greece and by the looks of it, will fail to save Spain. Rompuy and Barroso’s presence in Mexico mean they are looking for a little more leeway to get the continent back on the road to growth and prosperity.
The Minuscule Scope of the Problem in Comparison To European Determination
Belmont Commenters
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I once worked for a US phone company. Deregulation in the 1980′s had taken away their ability to participate in the lucrative long-distance phone market. New regulations in the 1990′s promised to allow reentry in the long distance market based on certain stipulations. My company had to re-engineer its computer systems to allow third party retailers access. This turned out to be much harder than everyone thought.
Several years and $1 billion dollars later, the computer systems were deemed compliant and entrance into the long-distance market was granted. Unfortunately by that time the bottom had dropped out of the long-distance market, with new technologies dropping the profit to under a penny per minute. My company had no chance to recoup its billion dollar investment.
At some point in the middle of this long, costly, and ultimately futile project someone should have looked at reality and pulled the plug. But no one did, they just marched on toward the goal.
The fight to save the Euro seems equally futile yet so many are willing to pump more money and resources into the effort. Why do people do that?
Why do people do that?
One possible explanation (hat tip James DeLong) is found in the model of the “all pay auction”. in which everybody pays into the pot whether or not they win the bid. Only if you win the bid can you collect the item, plus all the payments made by the bidders that have gone into the pot.
This is why some people don’t stop digging. The apparent value of the prize rises the further along the auction goes. The Europeans have sunk so much into it that if they walk away now they can’t survive the loss. So they are driven by the idea that if they go one more step, then they might not only recoup the losses, but somehow recover all they collectively paid into it.
They have to win the bid, no matter what the cost.
That’s why they keep talking about “Europe”, as if their lives depended on it. But the thing is that it isn’t an all-pay auction. Not in reality. Most of the value they’ve poured into it has been destroyed. The pot has got a hole in the bottom. Instead of an all-pay out come, like RWE noted, the Euro project is acting like a Doomsday Machine.
But neither Rompuy nor Barroso can see it that way, probably because they are blinded by desperation; the alternative to “winning the bid” will mean not only that their miserable careers are utterly over, but that they have condemned themselves to historical infamy. Rompuy and Barroso are looking at eternity-long membership in the clown museum of history.
They’ll keep going until Steiner calls in sick and tells them he’s gone fishing. Until then, they’ll spend every last dollar, euro, yen and pound on earth to feed their wretched project.
CBDenver @ 1: “Why do people do that?”
It is one of the greatest human traits — never give up; we shall fight them on the beaches, etc. Of course, the problem is when that admirable persistence is devoted to a now-impossible goal. It must have been hard for executives who, all through their careers, had known that long distance calls were the cash cow to recognize that those days were gone and would never return. There were probably lots of consultants reaping large fees for reassuring them that the low mark-up was a temporary aberation.
Similarly, the real message the G20 ‘leaders’ should be dwelling on is that the last 20 years were the aberation. The era in which all governments could run budget deficits year after year are over; the game has changed. But those ‘leaders’ are stuck in the past, unable even to recognize that the ground rules which served them well for most of their careers are now inoperative.
The silly language used by the EU is compatible with their overall lack of seriousness. A general slush fund which they demand others give to them and into which they want to dip without any responsibility or accountability becomes a “firewall”. Imaginary actions that no one can coherently describe become known as “the big bazooka”. They may as well shout out together in a show of EU solidarity – “I know, let’s all play a game of silly buggers”.
Monty Python lives!
destroyed
stolen
finance: the art of moving money from place to place, until it is all gone.
–
so, one trillion Euros evaporated like a snowflake on a hot griddle. what will it take?
http://www.marketwatch.com/story/ecb-stays-out-of-government-bonds-for-14th-week-2012-06-18
“The ECB, which has intervened in markets much less than the U.S. Federal Reserve and the Bank of England so far, has ample room to act if need be. For example, ECB asset purchases stand at 3% of gross domestic product [while] those of the U.S. Fed [are] at 18% and those of the BoE [are] at 21%,” said Berenberg economist Holger Schmieding in a recent research note.
IOW – five or six more snowflakes, er, trillion Euros? mebbe seven or eight?
Oh, I’d like the commission on that, wouldn’t you?
How many trillions in a Weimar?
–
w @ 7: I wish I had a firmer grasp of monetary economics or knew someplace where those questions were answered. And if they aren’t answered anywhere, does that mean they are stupid questions?
There are no stupid questions, but there are stupid answers.
–
t @ 8: There isn’t enough mithril in all of Moria to bail them out.
But the Balrogs have discovered a magic way to turn hay into mithril. Now they just have to get over some bad reputations, attract some traders.
“a $430bn firewall”
The very best architects rarely build a firewall out of sawdust and old gasoline cans.
““The ECB should respond with all firmness,”
Now we know their game. They intend to make us giggle helplessly until we are discredited and then they will pick our pockets while we are unable to respond.
Thinking about the “all pay” auctions raised the question: what actually does happen to all that money that has been poured into the EU banking system? When the ECB creates a trillion Euros plus at 1% whatever becomes of it? Is it still there? Has it vanished? Declined in value?
What exactly is the delta of ‘created money’ and what is it worth? If the market can’t see it and price it, does it have a price we can speak of? Or are we looking at some aggregate number that only economists at Eurostat can see? Just something abstract?
Further, if printing money and giving it to the Euro banking system were a winning proposition, then the Fed would print it and lend it to them at profit.
What does it mean when you can print money but won’t lend it to someone? Someone like Europe? Perhaps even printed money has an implicit cost, beyond the mere value of paper and ink; and when the implicit cost of printing money rises beyond a certain point, printing it removes value from the economy. I don’t know. I wish I had a firmer grasp of monetary economics or knew someplace where those questions were answered. And if they aren’t answered anywhere, does that mean they are stupid questions?
Too many mysteries. Doubtless Rompuy and Barroso know the answers.
Europe has enough money to keep bailing out Greece over and over again. Have they not done this and little more, for all the long days the Steward of Gondor has stood watch over the Ephel Dúath, the Fence of Shadow? But Spain is the twelfth largest economy in the world. There isn’t enough mithril in all of Moria to bail them out.
Why do people do that?
It’s a pattern known as “loss chasing,” which (paging Jamie Irons) the shrinks consider the dividing line between social and pathological gambling. From a 2011 article in Neuropsychopharmacology:
“Gambling to recover losses, or loss chasing (Lesieur, 1977), is a central feature of human decision making (Kahneman and Tversky, 2000). However, in a clinical context, excessive loss chasing is also a prominent indicator of impaired control in a significant proportion of those individuals who report problems with their gambling behavior (Corless and Dickerson, 1989; McBride et al, 2010; Sacco et al, 2010). Left unchecked, loss chasing can produce a dangerous spiral of gambling involvement, increasing financial liabilities but diminishing resources, and, potentially, the serious adverse family, social, and occupational consequences of pathological gambling (Lesieur, 1979).
At a psychological level, loss chasing is complex and frequently involves conflicted motivational states, pitting the desire (or need) to keep playing against the dread of suffering even greater losses (Lesieur, 1977): powerful emotional states that are mediated by activity within dissociable neural circuits (Campbell-Meiklejohn et al, 2008). Gambling to recover losses is also associated with heightened states of arousal (see below) and a heightened preoccupation with gambling activities that is a prominent feature of the clinical presentation of gambling problems (Dickerson et al, 1987; McBride et al, 2010).” [emphasis mine]
With all due respect to the pharmacologists, however, I don’t think the drug exists that will cure the Eurozone bureaucrats of their loss chasing. OTOH, since the researchers used human subjects, perhaps we could volunteer Van Rompuy, Barroso, et al. for the next round of experiments.
For those who want the biochemical and neurological details of the study, the full article is free courtesy of the National Library of Medicine: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3055672/
In one USAF organization where I was assigned we had a problem with a young Airman. He wrote bad checks. His way of handling it was to call his dad in a city 150 miles away and say he needed money to cover the check he just wrote.
“Okay, son,” his dad would reply, “But as soon as you get my check you write one and send it to me so I can cover the one I wrote you.”
All would be fine as long as they could keep enough checks in the air. We all thought this situation to be absurd. Now, it’s a matter of international policy devised by the biggest brains in the financial industry.
Eventually the young fellow was ejected from the Air Force. To where do we send the people responsible for this vastly larger scheme?
How about Gitmo?
My post appeared briefly and then disappeared. If duplicated later I apologize.
JOSE MANUEL BARROSO ADDRESSES THE G20
I come to you defiant, proud
No sign of hat in hand
To speak to this G20 crowd
In terms not base but grand
We come here to be lectured not
On matters a to zed
Or how our banks and credit got
So deeply in the red
We come to tell the world through you
We will accept, for free
Your money, which is, in our view
A gift from you to me
It’s in your interest that you save
Us from these parlous straits
For if you don’t then from the grave
We’ll pull you to your fates
So pony up, let’s see the dough
The moola and the cash
And if you don’t then you should know’
We might do something rash
Like bring the whole thing crashing down
The whole world now on dole
With cries of woe from every town
And death from pole to pole
I keep wondering what will happen, if the adults come back to town.
If Mitt is the real thing and starts to deal with the unreal financial plate spinning that Obama has encouraged.
I can imagine markets being terribly impressed and all our problems evaporating, but then that usually happens only in children’s stories.
I doubt Spain will ever see that bailout money. Just getting pledges between insolvent nations is hard enough.
13. Gary Ogletree Just getting pledges between insolvent nations is hard enough.
US National Debt: $15,736,971,094,472 – Increased by $5,110,094,045,559 since the Inauguration. I’ll never call Obama a “cheap politician” again.
When the Euro hat gets passed around and lands in front of the good ole US of A, I hope that they get the same feeling that we got when they left us hanging (for the most part, and I note that the UK is not part of the core EU) in Iraq and Afpak.
The Martingale System of gambling. Double down on each bet starting with $100. Eventually you’ll reach a point that to recover your original $100 you’ll have to put more money one the table than you have on hand. Casinos love that system.
They use elaborate theoretical structures, buzz words out the wazoo, but in the end it is “Trust us. We’ll rob from the rich and give to the poor you…and just take a small cut for operating expenses.”
what actually does happen to all that money that has been poured into the EU banking system? Wretchard
That’s the irony of the situation. The EURO’s have a cash consumption system that exceeds the input. When the money is gone, the payments end. Well, not ALL payments. The true elites will always get paid. But anyone expecting any sort of government “entitlement” payment will see all payments end.
Then what? All hell breaks loose. Riots? Starvation? Loss of Sovereignty. Well, of course, all those things and more.
My perception is that all that has kept Europe afloat for the past two years has been US commitments to paper money. But the demands grow, and with no new inputs, will outgrow the Treasuries that Obama’s men have been spiriting out the back door.
When the European Union dissolves and the Euro goes the way of past European trash currencies, the US will also be bankrupt. Because when the Euro goes, it’ll be because the US Fed no longer can float it.
In reality, that point has already been passed, or will be passed very soon – hell not even Geitner and Bernanke known exactly where that point is. Just keep the system afloat through next November – that’s the imperative. No matter what, it can’t fail on Obama’s watch before the next election allows him to consolidate his gains.
But where does the money go? The same place it goes now. Out the door, for consumption by thieves, frauds, and those who have never paid into the system sufficiently for the funds exiting the system.
It’s as if I had a bank with 10,000 depositors, and suddenly, by the stroke of the Obama imperial pen, every American was given an equal share to the funds of that bank. Well, we’d all have our cup of coffee purchased with our total withdrawal, and then look at each other and say – “well, that was a light breakfast; which bank is for lunch” as we look for the next mark.
Socialism. Such total folly! From the pit of hell and Satan himself …
pac @ 9: It’s a pattern known as “loss chasing,”
4.1a When done with OPM it’s called “green energy”.
4.1ai. Also known as the “Solyndra Syndrome”.
What doubts? no one doubts that the Euro is finished. Throwing good money after bad just delays the inevitable and makes it worse when it happens. The politicians will not face that, except for Merkel.
It’s like the man who drops an ash on his carpet and sets it on fire. He doesn’t stomp it out because he doesn’t want to scuff his new boots. Later, as his house burns down, he thinks maybe it was a poor decision.
Europe will become the “Greater German Prosperity Sphere”
The UK will be US Airstrip # 1–in the region.
Contrary to Spengler’s dreams-
-there will be no demographic problems in Germany–educated Europeans are moving to Germany, 10,000 educated Israelis have moved to Berlin in the last 7 years.
Germany does not need to invade Poland-they are now buying up prime property in Poland in vast amounts.
Southern Europe will survive by tourism as a sort of theme park.
France dreamed of being the jockey ridding the German horse-
-France has been dismounted and is now looking – again- to the Arab/Muslim world for advantage–good luck with that.
America, UK and Australia should give wealthy, entrepreneurial European business men haven
Barroso is dancing on fire, if the euro disppears, so will th EU, and its lucrative civil servants and politician positions
I am very sad to have no politican that had the guts like De Gaulle and Churchill to make harsh decisions, stop the crazy waggon, and to go back to our roots and identity fate Wir sind kein Brusselian, nor kein Berliner.
The EU project failure shows that you can’t force people to believe into a new religion that is antinomic to the human nature, we need borders and to belong to a tribe for making progresses and develop a culture
Victor
“-France has been dismounted and is now looking – again- to the Arab/Muslim world for advantage–good luck with that”
hmm, don’t believe that, we crossed two WW and survived, we do not depend on exportations like Germany does/did for surviving, our country is self sufficient !
hmm The Arab/Muslim world doesn’t frighten us, we know how to deal with it, besides it is ready to re-work with us, rather than with the Chinese.
Just that our kool-Aid politicians will have to abandon the white guiltiness card, but NECESSITY will make it
“France dreamed of being the jockey ridding the German horse-”
That was the role that the allies allotted us, as Germany had no right to deploy its diplomaty and army onto the world conflicts
For us everyday folks, prosecutors call what Rompuoy & Co. are doing “check kiting”, or maybe a more gentile banking ploy, “working the float”, or the common Ponzi scheme. Whatever it’s called, it’s a game of financial musical chairs, where the latecomers lose.
As to where the money goes, I’m no financier, but it seems to me there has been a huge transition from bankers living off interest to bankers living off up front fees and selling the loans, passing the risk on to other entities down the chain, until there is no more margin to skim, and the taxpayer is holding a worthless chit called national debt, or maybe inflated, worthless fiat money. I’m not sure the USA can save herself after decades of propping up Euro socialism and our own ever-increasing socialism. Let Europe sink.
To save himself, President Obama is urging greater political and economic European integration.
The human, economic and efficiency cost of that averaging out is enormous, but apparently as nothing to the overarching goal of getting Him back into power. This is a disappointing thing about the One, and still a more regrettable aspect modern culture. How sad it is that we now revile those who would die for us and have learned to worship as “cool” all those who would make us die for them.
They had a word once for people who put their own safety and comfort over those they swore to serve. And they had another word once for those who praised those who trampled on them. Whatever those words once were, they will eternally deserve each other.
stoicheion 19,
“Later, as his house burns down, he thinks maybe it was a poor decision.”
Close but no cigar. Later as his house burns down he calls his lawyer and arranges to sue the rug maker the cigarette maker the house builder the shoe maker and the fire service. Remember it is never the designated victims fault but someone (else) must pay. This all would have been much simpler if the eeeevil Rethuglicans had not frustrated Nancy Pelosi’s efforts to lend dignity to the proceedings of government with the Omnibus Blame Bush Act.
To save himself, President Obama is urging greater political and economic European integration.
Let’s deconstruct this. Obambus is just trying to apply his non-existent expertise to the advice he is hearing from his semi-legitimate economic advisors, that the US economic numbers will be dragged down by a falling EU. This is probably true. And he is sharing his best understanding of what they should do which is two parts, (a) Porkulus, and (b) Bernankecare. Neither of which most in Europe are eager to do, and they claim they are incapable of printing money – and thus of porking their own economies. As I’ve said from the start, they will find a way to do both, for better or worse. It will save them for the moment, kick the can down the road a year or three – at least it has for us.
Is it any of his business? Not really. Does anybody in Europe respect a word he says? Doubt it. Are they going to do it anyway? Yup. Will it help the US economy enough to save Obambus? I don’t think so. Will Obambus try to take credit if Europe does not collapse, in part because they do find a way to print Euros? Probably. Will the US public care? I don’t think so. But Obambus has not looked that far ahead or he might just stay home, play a little more golf, and just keep blaming everything on Bush.
The bank lends $100 Euros to Signor Quixote to buy a broken down mare worth $10 so he can go a questing. The quest doesn’t go well and Quixote cannot repay the loan. The bank has a non-performing asset, so non-performing that even if it repos the mare it has still lost $90. If it recognizes on its books that the mare is only worth $10 that it does not have enough reserves on it books to cover its operations and would be forced to either sell off performing assets or raise capital some other way or go broke.
So what does the bank do? Well if it is a big bank instead of raising capital it hire a PR firm to convince the public, the regulators, and the government that if they go down they are going to take everyone else with them. That is actually a dubious assertion because trust me it does not take a rocket scientist to understand that if you can rent money at 1% and then lend it at 7% you will get rich a lot easier than you can competing with Honda in the car ebusiness. Once you’ve sold everyone on the idea that your big bank is irreplacable The Bernanke or the ECB will pretend your $10 mare is worth $100 and give you 100 freshly printed pretend dollars thus recapitalizing you.
Wretchard’s question is what becomes of the 100 pretend dollars? How do they affect the economy. But the real question of course is what becomes of Signor Quixote and his erstwhile horse? They of course are both ruined and because they are the bank cannot find anyone to lend money to except of course The Bernank’s good buddy and partner in crime Turbo Tax Time who has a bushel of AAA ere AA+ ere maybe AA- gummint bonds to sell which of course he may never be able to redeem but of the bank wants to sell The Bernank a $10 mare for $100 then he is going to have to buy Turbo Tim’s bonds as part of the bargain.
In the end the bank has traded one worthless asset for another but who cares as long as there is $100 on the books, or 100 pretend dollars on the books that the regulators will give their blessing to.
wretchard,
OT
By your leave. A message from Roger Simon made reference to a new Commentator registration system, with reputation voting, that would be implemented as a common user interface platform across all three, media TV and Instapundit, of the main PJM portals. Will this affect members of the Belmont Club community? Will we in the future be locked into a given nom de blog?
My hope was that you would be able to revive the Tocque feature. You poured time and talent into that and it served well.
The break-up of a rigid exchange rate system always looks like this.
If the system was based upon specie, the clowns would be begging for bullion.
======
In a FIAT SYSTEM money is ONLY backed by taxing powers.
Since Athens has, obviously, poor taxing powers her fiat currency the Euro-Drachma is in peril.
The absolute essence of THEIR currency is that Athens is the ONLY backer of it.
All of the stumbling around is oriented towards shifting Athens’ fiat liabilities up to Berlin. If that were the only issue, the ECB ‘dance-around’ would’ve cleaned up the fraud upon the market.
However, Rome and Madrid have the same taxation weaknesses — but with real scale.
=========
Liquidity is not the problem.
Profit and loss is the problem: their economic engines are broken.
Because of the very complex interplay between statist spending policy and electoral returns — it’s impossible for the southern tier of nations to shift over to the tight credit/ good money fiat that Germany has.
The retreat from a rigid 1:1 parity is required. It does NOT mean that the Euro, per se, is dead. Instead, the weaker players will simply drop out and the hard money zone will contract.
20. Victor
France, and most other Euro nations (thru guilt by association) have big trouble coming. For centuries Europeans systematically looted the Islamic crescent, as well as any other nations with anything worth stealing. Arabs enjoy their grudges. They don’t bury them, they stuff them, mount them and sing praises to them.
Anyone that thinks they have forgotten over a century of getting colonised (without protection or lubrication) is mistaken. If it looks like Arabs have the chance to get even, they will. If they see a chance of getting ahead, they will.
Remember, Osama was still worked up over losing Spain. That happened in 1492. Once bin Laden got his 3rd eye, he stopped worrying about it. There are still LOTS of Muslims that are still concerned. While it would be nice to give them all a 3rd eye, the job is too big for hand tools. So until America elects a POTUS with testes, it’s just a dream.
Rompuy and Barroso were both speaking English. I suppose that means their target audience is English speaking. Whom do you suppose that target audience is?
From what I understand, Canada is refusing to pony up. They recognize that raising the retirement age to 67 (just passed in Parliament) and funding nations that drop the retirement age to 60 won’t go over very well.
All you need to know about monetary issues is that global debt is over $200 trillion and probably by the end of this will be at about $120 trillion or so. There will be large amounts of money lost; bonds will be worth 15 cents on the dollar or a complete writeoff. Payments on debts will no longer be forthcoming. Until the level of debt decreases to the point where existing economic activity can support it.
So this 1 trillion euro just disappears into the maw of debt payments and allows the system to operate another day. That 80 to 100 trillion dollars being lost gradually and inexorably becomes 79-99 trillion. If someone is smart, they take the money and leave; sock it away or buy something tangible.
14 And the heaven departed as a scroll when it is rolled together; and every mountain and island were moved out of their places.
15 And the kings of the earth, and the great men, and the rich men, and the chief captains, and the mighty men, and every bondman, and every free man, hid themselves in the dens and in the rocks of the mountains;
16 And said to the mountains and rocks, Fall on us, and hide us from the face of him that sitteth on the throne, and from the wrath of the Lamb:
17 For the great day of his wrath is come; and who shall be able to stand?
“To save himself, President Obama is urging greater political and economic European integration”
On the surface level, this refers to the blowback the US economy will experience from a European economic collapse. But on a deeper level, the threat is to the ideology of the left. The EU was supposed to be the socialist third way, the socialism that works. Leftists have long pointed to Europe as the shining example of what America could become if only we too would adopt their socialist policies.
Now that EU-style socialism is on the brink of collapse, the whole program of the left in America is in disarray. How can Obama and his socialist followers tell us to become more like Europe now that the European experiment has failed? They can’t. That is what keeps the leftists up at night.
28. Blast From the Past
The Economist has a comment rating system that is very similar to the one outlined by Roger Simon. In the Economist system you can have different nom de blogs associated with different email addresses. Most people have a collection of different email addresses on different servers from different ISP providers (I use eight different addresses for example). On many ISP providers you can create as many email accounts as you wish. So I read that message as meaning that you can only have one nom de blog for each email address – not a big deal since you can create as many email addresses as you wish.
32. derek
Yes, so far Canada is telling the EU to get lost and quit with the panhandling already. The message is that the EU contains some of the world’s richest countries and they should fix their own problems, not expect other countries to do it for them.
Let’s hope we continue to tell them to go find some other patsy.
30. stoicheion
you’re talking of a bunch of lunatics, these have a lesser influence on government like Marocco, Algeria, who are aware of globalisation and the risk to let one country like China pillaging their richnesses without conterparts
“Jugeant l’Union pour la Méditerranée trop « dispersée », ils appellent de leurs voeux pour la structuration de la Méditerranée occidentale, un axe Paris-Alger qui serait l’équivalent du Paris-Berlin de l’Union européenne. A l’heure où les Chinois et les Indiens courtisent l’Algérie, nos deux pays feraient mieux, jugent-ils, de faire fructifier ensemble leurs richesses, du gaz naturel au tourisme. Ils conseillent d’approfondir leurs relations en faisant des propositions concrètes sur l’université, les PME, la francophonie, la culture.”
http://lecercle.lesechos.fr/cercle/livres/critiques/221144523/france-algerie-avenir-commun
“Phénomène bizarre : les anciens combattants, qui bénéficient de certains avantages matériels, sont aujourd’hui beaucoup plus nombreux que dans les années qui ont immédiatement suivi l’indépendance ! Une vieille plaisanterie circule à Alger : “Vous êtes chômeur ? Vous cherchez un emploi sûr ? Devenez ancien combattant !”
http://www.lepoint.fr/monde/ou-va-le-monde-pierre-beylau/france-algerie-le-bidouillage-de-l-histoire-28-03-2012-1446094_231.php
There is absolutely NO CHANCE of fixing either the Eurozone or the US economy unless they start with the admission, “Okay, we are incapable of fixing this problem because we really don’t understand how we got here.”
The same people who got us into this mess obviously have no realistic grasp of how to manage an economy, otherwise we would not be here. Isn’t that obvious to everyone else?
Why are we still listening to these clowns?
When begging for a loan the last thing to do is to tell the lender you are not going to listen to his advice. With any luck Mr Harper will be T’d off enough to decline.
SpeakEasy @ 37:
We were never listening to these clowns. Back in 2003 there was wonderment expressed on these pages how so much money was being sunk into building better patios. Better patios for the Spanish, the Irish, the Americans, heck, everybody! All the action of the housing market was pointed to screw the common man. Housing prices exploded everywhere out of control. That was a very bad thing because it forced housing prices up to where the common man had to take on excessive debt in order to play. Meanwhile the elites “flipped” the houses and enriched themselves in temporary game guaranteed to flame out. A greater fool gambit.
As the dust settles it is clear that the lion’s share of investment during the last decade went not to industries of the future but to patios.
The current leadership is dedicated to propping up the sale price of patios. This never made sense, and it only makes sense when you consider that global banking system is very heavily invested in patios.
You CAN make money with a patio. Especially by the pool, when you throw on some shrimp on the barbie and wheel in coolers of refreshing beverages. But you aren’t going to build a nation running patios.
But, in Europe and in America, that’s what we have. Economies invested in patios. These economies won’t be healthy until all the patio investors and patio owners are brought back down to earth and to insolvency.
36. Marie Claude
I used the Bing translator instead of bablefish and got something about economic trade from gas to tourists. Then a joke about the best job being a vetern. Or safest job.
The threat to Europe comes from the other side of the Islamic crescent. Although with the Russian, Chinese and Iranians talking about moving ground troops in Syria, that corner of Islam might have it’s hands full soon. It’s unfortunate that POTUS and the JCS combined have less spine then your average jellyfish. It would be pretty easy to do to them what we did to Saddam’s Army in Kuwaitt. Destroy their air defences and then pound them with BUFF’s.
The Air Force bombed Saddam’s Army EVERY day at high noon. Not 11:59 or 12:01 but 12:00
Very demoralizing to wait for the bombs to hit, knowing you can do nothing about it.
Kinuachdrach #3:
“It must have been hard for executives who, all through their careers, had known that long distance calls were the cash cow to recognize that those days were gone and would never return. There were probably lots of consultants reaping large fees for reassuring them that the low mark-up was a temporary aberation….The era in which all governments could run budget deficits year after year are over; the game has changed. But those ‘leaders’ are stuck in the past, unable even to recognize that the ground rules which served them well for most of their careers are now inoperative.”
Not so much stuck in the past, but stuck in the near future, and wedded to the economic outcomes of the next few years.
While it’s true that the very elite have enough money that their lifestyle will not suffer significantly when the discontinutity occurs, the very next tier down and all the worker bees suffer from the usual terror – that the gig will end before the pension arrives. Writ large, this (along with philosophical laziness) is the reason for the ossification. The idea that all this time spent will not get the golden ring of the guaranteed big pension and twenty years in one’s twilight and senescence living like a pretend rich person without any anxiety is too much to bear. It HAS to work, because otherwise the anticipated anxiety-free, well-off decades evaporate.
I believe the term is “wishable”.
We can write about the resemblance of all this to gambling addiction and I suppose there’s a kernel of truth to that. I think in the end, though, Occam’s razor and the darker side human nature offer the best explanation for the doubling down on stupid and unworkable. Think of the bad Captain Kirk, sobbing “I want to live! I want to live!”
Max Hastings evokes the image of a calm before a wrenching storm. As an historian, Hastings must be aware he is evoking Grey’s statement about the “lamps going out all over Europe” or another beautiful summer 72 years ago.
Except this time there is not even tragic significance to lend the explosion weight; nor even the consolation of a grand crusade against a mustached maniac to give it meaning. It is disaster compounded of only folly, self deception and idiocy. Barroso and Rompuy are the Laurel and Hardy of modern European politics, except that they lack the talent to entertain as well as the wit to lead.
When the epitaph of the EU is written, it will be said they were done to death by clowns.
Some Euro bureaucrats are so deeply entrenched that it would take dynamite to dislodge them. They are untouchable. They hold absolute power. They need money to stay in power.
As the old saw goes, “Power corrupts. Absolute power absolutely corrupts.”
In February, the ECB released a trillion euros in 1% bonds as part of its “campaign to stabilise the euro, forestall a new credit crunch and shore up troubled banks by flooding the markets with hundreds of billions’ worth of easy money for the second time in two months.”
My big question is……….
How long before we start hearing about “quadrillions”?
From the Max Hastings article W linked @ 42: “Day after day, ever more desperate expedients are employed to patch up the latest crisis — €100 billion for Spanish banks, new guarantees for Italy. Inevitably these ruinously expensive sticking plasters offer no prospect of resolving the core issue, which is that members of the euro have demonstrated that they do not and cannot continue together in a common currency block.
Even someone as smart as Mr. Hastings has failed to identify the true core issue — that the Political Classes have become addicted to spending more money each year than they take in. And so they have become further addicted to borrowing money, year on year. And they are now becoming addicted to printing money (“Quantitative Easing”), since the supply of willing lenders is running low.
The Euro problem would be handleable, if only the various governments were not STILL spending more each month than they take in. And — Hush, don’t say this too loud — even mighty Germany runs a budget deficit and has a massive accumulated national debt.
The EUnuchs are victims of the false doctrine of misapplied Keynesianism. Unfortunately, so are most of the rest of us.
Oh bother! Where is the Edit function when it is needed?
My apologies for the unclosed italics. The first paragraph in #45 is the quote from Max Hastings. The rest is bloviation from this humble poster.
Cowboy@39,
RE Patios: back in ’07 I took out a home equity line on my home. Only I did not reinvest it in the premises. Instead, I used it to purchase a property with better liveability, resale value and views!
This is not what most people are told to use an HeLoc for: it is designed ostensibly to be used to improve the securitizing property.
Now, back to Spain…if you were a thirty-something living in Spain, and you see nothing but problems on three horizons (to the East a malignant, consolidating Ummah, to the North, a beggaring relationship with industrial Germany, to the South the usual Saharan sloth) but to the West lies the great ocean and America with many fruits to pick. And, you have just been granted a loan and so some liquidity is available for you to capitalize your next move…what would you do?
Me? I’d use the money to divest from my continental mire and stealthily invest in my new digs!
How many of the peeps in Europe have already made this decision I cannot know. But my sense is, any bailout dough that gets to Spanish citizens will not be spent in Spain. And, funny thing is, if any portion of the Americas were to appear particularly attractive it’d be one where my native language is spoken, where my culture (Hispanic) has some clout, and where my investment stands a good chance of being protected by law and custom. Read: the American Southwest.
Could it be the USA’s push-and-pull over second language mandates, the proliferation of Spanish (not French) at bank ATM’s and even Obama’s recent ‘amnesty’ gesture, might combine to lure the bailout-Euros to places like Los Angeles, Phoenix, El Paso?
Insofar as these place represent New Spain, they ought to attract Old Spain’s dying capital. But only if the Spanish citizens are smart and disobey their creditors’ advice.
Stoicheion
Let them kill each others, enough to play the good Samaritain for them
Me thinks we should watch more for the relations Germany + Russia…
It seems that Germany is letting the situation rottening for getting a free hand with a northern Empire… at East of course. Merkel doesn’t want to be seen as the person by whom the euro failed… so, she waits and sees !
BTW, this vid is hilarious
http://www.youtube.com/watch?v=I5QwKEwo4Bc&feature=share
It does show the reality of the dilemn, everyone is broke !
“…where Barroso promptly declared that ‘we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy’.”
Brings to mind something I heard about our troops in Somalia in the early 1990′s. Young men there would sit around all day chewing the leaves of a plant, “cat” and at night light the place up with their weapons. Our troops started trying to get the problem under control by confiscating the drugs.
A Somali doctor complained. “You are not here to try to change our culture. You are supposed to be here to help.”
We were there to help distribute food because of the severe famine. And you needed an effective military to distribute that food because of all of the drugged up men with guns running around shooting up the place. But we were not supposed to be changing their culture.
So Barruso and Rompuy should be congratulated for bringing Failed Third World State attitudes to Europe. The rest of the Third World characteristics should follow.
“What does it mean when you can print money but won’t lend it to someone? Someone like Europe? Perhaps even printed money has an implicit cost, beyond the mere value of paper and ink; and when the implicit cost of printing money rises beyond a certain point, printing it removes value from the economy. I don’t know. I wish I had a firmer grasp of monetary economics or knew someplace where those questions were answered. And if they aren’t answered anywhere, does that mean they are stupid questions?
Too many mysteries. Doubtless Rompuy and Barroso know the answers.”
Wretchard, I believe you understand this, but in case others do not appreciate the implications of your questions, the answer is Wiemar, or Zimbabwe if you prefer a more modern example. The Germans understand the implications, not only of the monetary policy, but the political implications (all power and wealth sucked into the hands of man who controls the printing) of such a monetary policy all too well. Which is why Merkel keeps saying, “Nein”
Fiat money is based on trust. The trust had a ‘design margin’ built into it. We have been abusing that trust, consuming that design margin, globally, for an extended period of time. Dollars and Euros have no value unless you believe you will be able to buy something useful with them. The act of printing more Euros, without creating an equivalent amount increase in the ‘things of value’ creates inflation. If you cross a line, which no one knows quite where it is, you see currency collapse and hyperinflation.
We have been hiding the signs of inflation from ourselves for over a decade. We see the Consumer Price Index with only modest increases. We see Treaury bonds trading at 2%. It all looks OK, until you realize they have systematically abused the CPI calc to hide inflation (chaining, substitution, exclusion of food and energy from ‘core’). The bonds are trading with such low yields because the federal reserve is buying them up (with digitally ‘printed’ dollars) at prices no one else would pay to hide the inflation and fund the deficit. We pretend there is not a problem because the dollar buys about as many Yen and Euro as it used to…while ignoring the fact that all of the currencies have been printing like crazy for years. It is as if three guys named dollar, euro and yen jumped off the empire state building together, and because they are all still within a few feet of each other they convince themselves they are not plunging to their doom. In the US, the cost of gasoline, one of the primary energy costs, has almost doubled since the crash. The cost of food is up over 50%. There is inflation in things, just not inflation in the metrics because they are being manipulated.
The end state is a loss of trust. The cost of printing dollars and euros is that for every one you print, you are sapping the value out of all the other ones already in existance. As long as the design margin and trust hold out, printing a new dollar or Euros ‘creates’ more value in the new Euro than it destroys in the all the old ones. Once you cross the line of trust, all that difference in value ‘created’ by earlier printing is recognized and the currency collapses. Once that collapse starts, it is effectively impossible to stop within the construct of the existing system. The system collapses and a new system is built on the ashes of the previous one. Once lost, trust in the system is not regained.
There have been several hundred examples of fiat money systems in the history of mankind. None of them has survived more than 100 years. The current iteration really started with the USD losing domestic gold convertability in 1934.
Yes the European Union was a gamble – quite literally they were gambling that they could create political union through a single currency. It always struck me as a bluff they might get away with if they had the time to completely erode national identity to create generic Europeans. But economic trouble has called the bluff and it looks like they were trying to draw to an inside strait. They would have done well to hire Kenny Rogers as a consultant to teach them when to hold ‘em, when to fold ‘em, when to walk away and when to run.
” … draw to an inside strait.” I’ll see your inside strait and raise you two inside straights.
CB : “On the surface level, this refers to the blowback the US economy will experience from a European economic collapse. But on a deeper level, the threat is to the ideology of the left. The EU was supposed to be the socialist third way, the socialism that works. Leftists have long pointed to Europe as the shining example of what America could become if only we too would adopt their socialist policies.”
At first blush, what you have written I thought was the heart of the matter. But then I start a thinkin- always a bad idea.
In all these bailouts, it is only the banksters that get any real money- the governments and the people only get pennies on the dollar. Yes, the purpose is to kick the can and play for time, but to do what exactly? At the root, no one in power is telling the Banksters – hey you got us into mess and you need to take a hit too! The supreme irony of this Ponzi Bailout is that the Blue/ European Socialist Model is going over the cliff to protect the Banksters.
But something bothers me. Any bankster worth his salt would know sooner or later that this Ponzi was going to blow up big time. So why did the Big Banking Families like the Rockefellers and the Rothschilds push this Ponzi? Are they so full of themselves that they think they can enslave us in the end and become Emperors of the World? What happens if a President comes along ( and I hoping Romney has a road to Damascus conversion to do this) who says enough of this crap, declares them economic terrorists, seizes their assets and hunts them down like the stinking little criminal pigs that they are?
W/42—from the same article: ”Meanwhile, in Italy, the ten-year bond yield stands above a punitive 6 per cent; and the Spanish Government is obliged to offer 7 per cent to persuade investors to buy its debt. These numbers mean that the markets have no faith at all in these countries’ ability to stay in the euro. Investors are convinced that the whole rickety racket is on the brink of collapse, and they are almost certainly right.”
Question: exactly who are these ”investors” and if they really are ”investors” and not just chumps, why would they buy this debt?
Unsk @ 53: “What happens if a President comes along … and hunts them down like the stinking little criminal pigs that they are?”
A politician calling a banker a stinking little criminal pig? Pot, meet Kettle!
9. PA Cat
Why do people do that?
It’s a pattern known as “loss chasing,”
What small-time drug dealers deep in a hole call “a boost.” They get fronted some serious money by somebody to try to get back into the game.
Once again, in the midst of all this virtual money-laundering and cargo cultish loan scheming and money printing, there is not once a mention or suggestion or plan to create wealth. It’s as if the “Limits to Growth” mentality that has pervaded the Western Left also assumes that there is a limit to wealth, and no new wealth can be created. All this huffing and puffing, at some level, is about reshuffling and trying to save a finite and dimishing resource called “wealth.”
Indeed Wretchard, Europe is being done to death by clowns.
Can I just remind BC readers that Barroso was ‘elected’ in an ‘election’ in which he was the only candidate. Van Rompuy was appointed during a dinner. Leaving aside their Maoist/Communist backgrounds, and any insinuation of a deeper and darker plot, they simply are in way above their skill level. They do not know what they are on about, as Farage has made plain. The EU has set up a Dmark Gold Standard, which is too tough for the Latin countries. Once again, Europe will peel apart on the German/French border.
9. PA Cat
Why do people do that?
“Gambling to recover losses, or loss chasing (Lesieur, 1977), is a central feature of human decision making”
What these folks, at the EU (and the Fed, and Congress and the White House etc.)is not loss chasing, since thay are not doing it with their own money. What they are doing is preserving their own wealth, power, & prestige at the expense of others. It’s a “Win/Breakeven” deal for them. For the citizens, it’s a “Breakeven/Lose” deal.
The elite, as a group, always come out on top, until they end up swinging from a lampost!
Time to invest in the Euro printing business. Anyone out there got any contacts with the sources?
As long as we don’t get paid with Euro’s.
“Question: exactly who are these ”investors” and if they really are ”investors” and not just chumps, why would they buy this debt?”
Answer: John Corzine, Obama bundler and trusted adviser to Team44 regarding all things financial. I am unable to answer the last part.
Can anyone tell me who makes and supplies the paper and ink from which the Euro is produced?
…De La Rue, A British company in Hampshire, England, prints banknotes for 150 countries including the Euro. They printed Drachmas for Greece in the past.
Kin@ 55 ” A politician calling a banker a stinking little criminal pig? Pot, meet Kettle!”
Romney had been saying some good things about Constitution, of course in vague terms without any real connections to real issues that would make a difference. I was starting to warm to his candidacy. Then came word of his performances this weekend. Revert to form. On Face the Nation and on his bus tour, apparently Mittens awkwardly refused to address Buraq’s most recent unconstitutional Executive Order on Illegals. What was I smoking?
Willard is dead to me now, again. If ya can’t defend the Constitution when we really need it, what good are ya?
We know that Buraq is an agent of the Special Interest Police State. The question is whether Romney is too? From all the evidence that we’ve seen, it appears that Romney is just a kinder, gentler, more polished Agent of Special Interests and not really interested in representing We the People. Romney will just present a new fresh face to divert our attention for a while sufficient to consolidate Special Interest Rule. As such, this Presidential Election is pointless and we are toast as a nation.
BTW, based on your historical evidence of past posts, a Rethug who can’t excite the base will lose every time. So this election is already over despite the mess Buraq continues to make. If Romney can’t stand up to Buraq, just this once, forgettaboutit.
The Headline says it all: ” Spain – thanks for the $125 billion, but can I have $625 Billion more?”
http://blogs.the-american-interest.com/wrm/2012/06/19/spain-thanks-for-the-125-b-can-i-have-625-b-more/
The strategy of conficating the banker’s wealth and jailing the bankers or worse has been tried. During the middle ages there were frequent pograms against the Jews when the sovereign debt became too high. As a result the governments had to pay very high rates of interest for credit. Going after the bankers will lead to a depression that will make the 1930′s look like a boom in comparison. We do NOT want to go there.
Unsk @ 63: “Willard is dead to me now, again.”
I second that emotion — with deep regrets. Given an opportunity to stand up and clearly state that Obumble’s Excellent Amnesty was unacceptable because of its unconstitutional process, regardless of its substance, poor old Mitt failed the test.
Still, the show isn’t over yet. Maybe Mitt will have a Road to Damascus-type experience on the rubber chicken election circuit, if the Institutionals give him the opportunity to meet enough ordinary citizens. Maybe!
Octa-” Going after the bankers will lead to a depression that will make the 1930′s look like a boom in comparison. We do NOT want to go there.’
Earth to Octa not too bright. We already are in a depression right now. The Bankers are not lending now, high rates of interest or not. Those who are getting loans are getting those only with absurd terms. The leading creator of jobs, small business, has nearly been shut out of the market. Those with lines of credit, have seen those lines cut drastically. Those with credit card debt, which is very prevalent among small business, have seen interest rates on balances go to the high twenty percent range. Many businesses right now are burning through reserves and are at the end of their rope. In this punitive regulatory environment, once a business goes under, it often very hard to resurrect it. The fat is gone in this economy; we are now losing muscle. Even according to the FED, net worth is falling rapidly. This situation is not going to change anytime soon, unless we take tough action, prosecute the miscreants, reinstitute sound banking and we cut off the TBTF bailout gravy train.
Oh ya, and are we supposed to let the Banksters break the law with impunity because they are too powerful to prosecute? Great Concept. So now the rule of law now only applies to us peons? Let’s just flush that Constitution thingy down toilet- all the right people say so I guess. Oh, and exactly how are we to stop the next giant squid Ponzi?
http://en.wikipedia.org/wiki/Euro_banknotes
the printers are detailed down below…
======
no nation shut down its central bank
no nation stopped coining money, nor printing their unique currency — check the list as to how it’s done.
all bank balances within greece are euro-drachmas — just as fiat as they were before as drachmas.
======
the specifics of the treaty spell out that NO EUROPEAN NATION IS TO BE OBLIGATED OF ANY OTHER’S CURRENCY.
that last little point keeps getting ‘overlooked.’
just because they’re lying to you doesn’t mean that you’re supposed to believe it. they don’t.
( My shift key blew up. )
@67. Unsk
1. As defined a RECESSION is 2 consecutive quaters of negative growth. We are NOT therefore in a recession. If you do not like the definition (I’m not sure I do in this case) blame the economists, not me.
2. The banks are not lending because they can do better buying treasuries. The regulatory climate makes small business loans too risky. Home mortgages with the CRA, the government at various levels blocking forclosure, and the home value being so depressed are not a popular way to go, especially since the Rep Frank wants to start the cycle all over again.
3. Credit card debt is by its nature expensive because it is labor intensive and unsecured. Until it was exempted from usurey laws only a selcet few were able to get unsecured consumer credit. I don’t know if this is good or bad but lowering the interest rates by fiat WILL limit the availablty of credit.
4. Prosecute those who have broken the law, but if they are pressured by the government and/or regulators to make questionable loans they hardly are completely at fault and it is necessary to differenciate between tort and criminal actions.
5. You are seeing on a much reduced scale what happens when the banks consider the loan climate too risky.
6. The big Ponzi schemes have been protected by the regulators who were convinced that they were too smart and new the parties too well to be tricked.
7. I do NOT claim to be an economist and I have been wrong in the past and will be wrong in the future. However, before you disagree with me please read what I say carefully and keep in mind that the banks and the government are legally different entities. Do not blame the banks for the regulations.