Monday 14 November 2011

The Euro disease gets hit by Wideboy tactics

Blimey, even by their own poor standards, the Eurocrats have been at work today, undoing every positive with a negative. As a result, Italian yields have not moved and the markets are heading south again. Bravo indeed.

The main culprit today is on Jens Weidmann, President of the Bundesbank. Herr Weidmann has seen it fit to declare that the ECB is not the lender of last resort for the Euro. Which begs the question, who is?

Unfortunately for the Euro-member countries that is not a question that should be regularly asked aloud. Rather in the mind of constantly asking ones neighbour as to whereabouts of his spouse for whom you know has eloped with someone else.

With no lender of last resort the world's 2nd largest currency has ever decreasing credibility. All this on the day when Super Mario was appointed in Italy to save the Country from the hands of its politicians.

For all the the plentiful problems with the Euro a new one must be chalked up; communication. If senior representatives of the nations within it cannot but help undermine each other's attempts at fixing any problems during a major crisis then indeed the 'project' is doomed.


Anonymous said...

I refuse to accept the missteps are mere accidents. They are deliberately forcing the issue forward because it has to get a whole lot more painful before the Germans beg Brussels to take their Treasury and distribute tit equally. Poor sods.

Sean said...

You have forgot the golden rules.

“A beer for the gentlemen, and a wine or fruit-based drink for the ladies. Those are the rules. Where would we be if we didn’t have any rules? France. Where would we be if we had too many rules? Germany.”

The problem in a nutshell from the pub landlord. Lets not the French dimension to this, they have been using their banks to buy debt in order to pretend they are still a world power.

CityUnslicker said...

Anon - Maybe, but as I have said elsewhere, incompetence often looks like conspiracy - but no one got poor underestimating the stupidity of politicians.

Sean - France, no rules? JFC, France has the most pettifogging rules in the known universe, entirely dedicated to screwing foreigners.

Where you are both right is that the coming crash will focus German minds; I just don't think that the current market ideal of either ECB QE or EFSF enlargement are nailed on. Instead horrible euro crash seems to be hoving into view.

Anonymous said...

We can surely forget EFSF since that was a turkey that was never going to fly. Now we know that the Germans won't stand for the ECB to buy bonds without "sterilising the debt" i.e. they can only buy if they have cash paid in that allows them to buy, they cannot simply create the money. Those are the current rules.

It seems Sarkozy is now doing nothing - with the rules as they are and German intransigence Italy will go under.

Spain looks like it might go under - but may refuse to bail out its banks first (which sure as hell will hit the Germans and the French). After all, bailing out the banks wasn't great for Ireland was it? I don't think Spain will bail out its banks. Makes no sense since it is clearly the road to ruin. That makes the Spanish problem more of a shared problem.

Anyway, the main thing is nobody is doing anything anymore. Merkel is telling the EU that it is time to go for USofEurope. She has actually spelt it out now (see link below). So it really is crunch time. However, long before we get to that point the Euro will need to be fixed. Since there is no sign of that happening it is no big surprise that Italy is using up the remaining cash in the system and Spanish and Belgian yields are zipping upwards.

Read the link. If there was anyone still out there that thinks that the EU is not aiming at a USofEurope, this speech by Merkel will remove any remaining doubts.

Anonymous said...

If the Bundersbank is not the lender of last resort for the Euro, well each individual central bank or government is resposible surely, each country printed its own Euros (actually or via bank lending) they were responsible for issuing the notes etc it should be fairly simple to devalue each country's Euro currency eg Gr Euros, Es Euros, It Euros, Irl Euros, Port Euros the notes and foriegn bank accounts (loans, bonds, etc) could be devalued, they could then still keep within bands set by the ECB.
I believe that long bridge connecting the southern part of Greece to the northern mianland cost 27billion Euros built by Germany (or have I got that wrong)

Nick Drew said...

if that bridge cost EUR 27 billion (and I'm not disagreeing with you, I have no idea) then it's an outrage - it ain't as long as all that

Nick Drew said...

Anon @ 5:53 - hey, I read that link and it's a corker !

"Brzeski said ...In addition, Germany’s economic strength gives her leverage that policy makers who built the euro didn’t have... [Merkel] can have much more of a German stamp on this political union than 20 years ago"

Europe just loves the sound of that German stamp, eh ? Shades of George Orwell

But all the Germans I know are such reasonable people. These wild-eyed Euro-gits are going to have to modify their enthusiasm if we aren't all to have nightmares:

Marschieren im Geist in unseren Reihen mit...

alan said...

The bridge cost approx 3/4 billion euros.

The engineering challenges were a) its in an earthquake zone and b) they could not set the foundations on bedrock.

Mark Wadsworth said...

The whole thing is completely nuts.

The media and pol's keep referring to the EFSF as a "€1 trillion bail out fund" when it has no funds of its own at all, and struggled to borrow €3 billion last week. It even had to massage its own figures by subscribing for a couple of €100 million itself.

Yup, the EFSF subscribes for its own bonds. It's QE madness taken to the next level.

Ed said...

I prefer Beer and Sausage to Humus and Ouzo anyway. USofE is fine by me.

I doubt britain would join (if only because of the city) although I'd be pissed if scotland or wales tried to!

Budgie said...

Anon 5:53pm - excellent link.

I have been saying for months that eurosceptic opinion that failure of the euro was "imminent" was naive, vastly underestimating the sheer will to power of the EU elites. The USE outlined by Merkel here uses the crisis to achieve complete financial union.

However I gather Cameron is now styling himself a eurosceptic. This means he is about to go for a "cast iron" moment as he lulls people into a false sense of security about the USE, and slips us in.

Weekend Yachtsman said...

"...USE outlined by Merkel here uses the crisis to achieve complete financial union."

Budgie, you're on the nail.

This has always been the plan. The euro was never intended to "succeed" as per outward appearances.

It was always intended to precipitate this "beneficial crisis", so as to drive forward the creation of the European unitary (not federal) state.

Cameron will be plotting our entry into this, even as we speak here.

Traitors' Gate is too good for him.

Mr Ecks said...

Whatever plans the 1000 year reich may be trying to hatch, they are still broke (in every sense of the word) and cannot pay their bills. No amount of political bullshit can get around that.

1-They decree a united states of EUrope. Millions will be against it and them. Are they going to try and emulate the shining success of the soviet union in running a police state?
2-The idea that this "union" is somehow the end of all the political pigs problems is laughable.Europe and the west in general is sinking under the weight of regulation, tax thieving (including inflation which is state theft just as surely as any formal tax), debt(the santimonious germans are heading for 100% gdp debts themselves--bail out the rest of europe?) and the consequences of welfare/warfarism and wicked laws already enacted, never mind those to come. The once "mighty continent" is going down (as is the USA) and nothing can stop that.Like an alki they will hit rock bottom.