http://www.zerohedge.com/news/grexit-spailout-and-draghis-white-knight
Submitted by Tyler Durden on 08/13/2012 08:39 -0400
-Arthur Laffer
In March, the last figures that are available, the Spanish banks lost $66 billion of capital as the citizens of Spain moved their money to safer havens. What the LTRO gave the populace took away and the situation is unsustainable. Spain will soon be forced into a full-fledged bailout in my opinion which will require money for the regions and for the banks. My best surmise is about $350-400 billion that will be required and while it may come in tranches; that will be the total. This will then shift the focus to Italy in the short run and then onto France and Germany and just how much can be afforded in this rush into financial imprudence dictated by trying to maintain a Union that can no longer stand under its own weight or national interests. The debts in Europe are no longer trivial and someone has to pay in the end. Free money, even printed money, is never really free and always has consequences which would be the downgrades of Germany and France in the short term and all of the increased costs of funding that would come with it.
“There is no such thing as a free lunch.”
-Milton Friedman
I think what amazes me the most is that so many people have the honest opinion that Sir Draghi is going to come charging out from the round table, from the gilded gates of the ECB and save Europe. That White Knight is subject to the whims of Germany and the rest and all of the talk of independence and the separation of Church and State is just that; talk. I fear these people are hitching their wagon to some shooting star that won’t shoot. Blitzen, Donner and the other reindeer are still out in the pasture fattening up for their Christmas ride and are not available to bring presents this early in the year. The holiday season will be upon us in due course but Santa is not Italian and Fettuccini Mario will not be served. I am afraid, long before December, that disappointment will be the main course and that the gruel will be apportioned.In this world there are mice and there are men. Men learned long ago to offer a free lunch in the mouse trap. One mouse after another has learned the consequences of eating it.
Submitted by Tyler Durden on 08/13/2012 09:00 -0400
Submitted by Tyler Durden on 08/12/2012 20:01 -0400
Hold on tight boys and girls, cause Merkel is back from vacation, and she is not happy despite that healthy Santorini due diligence-inspired tan (as deputy-Chancellor Fuchstelegraphed earlier today, when he made it quite clear what his boss thinks about Greece, and about more printing). Per Bloomberg: "German Chancellor Angela Merkel returns to the front line of the European debt crisis this week as the bloc’s leaders squabble over measures including bond purchases to relieve concerns the single currency may fragment. Merkel ends her summer vacation and travels to Canada Aug. 15-16 for talks with Prime Minister Stephen Harper as a spiraling euro crisis threatens to constrain the global economy. With the region’s leaders awaiting a German high court decision on bailout funding next month, they’re struggling to smooth divisions over a European Central Bank plan to buy the bonds of indebted nations."
On GRExit, SPAilout, And Draghi's White Knight
Via Mark E. Grant, author of Out of the Box,
“There was a free lunch just once. It was when Eve gave the apple to Adam and we all know how that turned out.”
-The Wizard
As I stare out at the Maginot Line I will endeavor to predict the upcoming events in Europe for the balance of the year. I called Greece, Ireland and Portugal correctly so I have some standing here and while we all are only as good as our last call; I have my own small pin on which to dance. I think first and foremost that Greece falls by the wayside. I think as a matter of political reality, given the German polls, that Berlin will refuse to adequately fund Greece and that they will be forced back to the Drachma as a matter of Ms. Merkel’s desire for re-election. When this happens it will be a quite messy affair with some $1.3 trillion going into default which will also require the re-capitalization of the ECB and there will be a $90 billion hit in derivative contracts which may well affect certain banks past the point of what is currently recognized. The Greek banks, bankrupt now, will train off into the abyss and will be replaced by other European institutions. The honest truth is that the Greek debts have become so large and so impossible to pay that unless there is absolute debt forgiveness, which I think is politically impossible in Germany and a number of other European countries; the country must roll over as a matter of fiscal reality.“What I'm not saying is that all government spending is bad. It's not - far, far from it, but there is no free lunch, as a former colleague of mine used to say. There is no public tooth fairy. Father Christmas does not work on the Treasury staff this year. You can never bail someone out of trouble without putting someone else into trouble.”
-The Wizard
As I stare out at the Maginot Line I will endeavor to predict the upcoming events in Europe for the balance of the year. I called Greece, Ireland and Portugal correctly so I have some standing here and while we all are only as good as our last call; I have my own small pin on which to dance. I think first and foremost that Greece falls by the wayside. I think as a matter of political reality, given the German polls, that Berlin will refuse to adequately fund Greece and that they will be forced back to the Drachma as a matter of Ms. Merkel’s desire for re-election. When this happens it will be a quite messy affair with some $1.3 trillion going into default which will also require the re-capitalization of the ECB and there will be a $90 billion hit in derivative contracts which may well affect certain banks past the point of what is currently recognized. The Greek banks, bankrupt now, will train off into the abyss and will be replaced by other European institutions. The honest truth is that the Greek debts have become so large and so impossible to pay that unless there is absolute debt forgiveness, which I think is politically impossible in Germany and a number of other European countries; the country must roll over as a matter of fiscal reality.“What I'm not saying is that all government spending is bad. It's not - far, far from it, but there is no free lunch, as a former colleague of mine used to say. There is no public tooth fairy. Father Christmas does not work on the Treasury staff this year. You can never bail someone out of trouble without putting someone else into trouble.”
-Arthur Laffer
In March, the last figures that are available, the Spanish banks lost $66 billion of capital as the citizens of Spain moved their money to safer havens. What the LTRO gave the populace took away and the situation is unsustainable. Spain will soon be forced into a full-fledged bailout in my opinion which will require money for the regions and for the banks. My best surmise is about $350-400 billion that will be required and while it may come in tranches; that will be the total. This will then shift the focus to Italy in the short run and then onto France and Germany and just how much can be afforded in this rush into financial imprudence dictated by trying to maintain a Union that can no longer stand under its own weight or national interests. The debts in Europe are no longer trivial and someone has to pay in the end. Free money, even printed money, is never really free and always has consequences which would be the downgrades of Germany and France in the short term and all of the increased costs of funding that would come with it.
“There is no such thing as a free lunch.”
-Milton Friedman
I think what amazes me the most is that so many people have the honest opinion that Sir Draghi is going to come charging out from the round table, from the gilded gates of the ECB and save Europe. That White Knight is subject to the whims of Germany and the rest and all of the talk of independence and the separation of Church and State is just that; talk. I fear these people are hitching their wagon to some shooting star that won’t shoot. Blitzen, Donner and the other reindeer are still out in the pasture fattening up for their Christmas ride and are not available to bring presents this early in the year. The holiday season will be upon us in due course but Santa is not Italian and Fettuccini Mario will not be served. I am afraid, long before December, that disappointment will be the main course and that the gruel will be apportioned.In this world there are mice and there are men. Men learned long ago to offer a free lunch in the mouse trap. One mouse after another has learned the consequences of eating it.
and......
http://www.zerohedge.com/news/italys-latest-record-debt-load-bigger-faster-more
Italy's Latest Record Debt Load: Bigger, Faster, More
Italy just announced its all-time record high general government debt load at EUR 1.973 trillion. What is perhaps most stunning, given all the talk of austerity, cutting back, reforms, and change is that the size of this debt is growing at an ever-increasing pace that is simply stunning. Pre-Euro (1999), Italy's debt was growing at a rate of just less than EUR 2 billion per month; in the eight years from then until the crisis in 2008, Italy's pace of debt growth (fostered we are sure by the convergent cheapness of funding and their immutable belief in invincibility) almost perfectly doubled to EUR 3.8bn per month. Since 2008, and the onset of excess Keynesian ridicule we assume, Italy's debt load has grown at a stunning pace of EUR 6.4 billion per month and perhaps most incredible; however, the last nine-months (since the peak 'peak' of the crisis in September of last year) has seen the pace of debt-load growth surge to EUR 9.5 billion per month. Sustainable levels of exponential debt growth - sure!
Italy's General Government Debt Load...
and.....
http://www.zerohedge.com/news/merkel-baaaaaaack
Merkel Is Baaaaaaack
Hold on tight boys and girls, cause Merkel is back from vacation, and she is not happy despite that healthy Santorini due diligence-inspired tan (as deputy-Chancellor Fuchstelegraphed earlier today, when he made it quite clear what his boss thinks about Greece, and about more printing). Per Bloomberg: "German Chancellor Angela Merkel returns to the front line of the European debt crisis this week as the bloc’s leaders squabble over measures including bond purchases to relieve concerns the single currency may fragment. Merkel ends her summer vacation and travels to Canada Aug. 15-16 for talks with Prime Minister Stephen Harper as a spiraling euro crisis threatens to constrain the global economy. With the region’s leaders awaiting a German high court decision on bailout funding next month, they’re struggling to smooth divisions over a European Central Bank plan to buy the bonds of indebted nations."
Bloomberg proceeds to recap what we already have explained over and over: the lack of an impetus by soon to be bailed out governments to act if they are bailed out, coupled with the impetus to cheat and do nothing, as well as the inevitable arrival of the German referendum.
"It makes no sense for the ECB to start financing” Spain and Italy, ECB Governing Council member Luc Coene said in an interview with newspapers De Tijd and L’Echo published on Aug. 11. “It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet.”The possibility that Germany’s high court will demand greater elector participation in euro decisions raised the prospect of a referendum in the euro area’s biggest economy, placing the country’s commitment to the currency in the hands of voters at time that polls show rising discontent with the costs of the crisis.The policy maker said the central bank’s experience a year ago demonstrates why the ECB is reluctant to step in."We haven’t forgotten what happened in August of last year: We bought Italian bonds and right after that the Italian government reneged on its pledges,” Coene was quoted as saying. “The conclusion is clear: When you take away the market pressure, you take away the pressure on politicians to act.”While Merkel has resisted the notion of a referendum, Rainer Bruederle, the parliamentary caucus leader of her Free Democratic coalition partner, told Hamburger Abendblatt last week that Germany’s role in the crisis might need to be put to a vote.“We may come to a point where a referendum about Europe becomes necessary,” Bruederle told the newspaper. “The future development of the debt crisis will show how much the EU countries will be asked to give up sovereignty.”Finally, just because it has not been on the front pages in over a month, does not mean that Europe's basket case, Greece, has been fixed. Far from it.The monthlong wait for the ESM decision will be paralleled by anticipation on whether Greece continues to receive euro rescue funds. Greece’s troika of international creditors -- the ECB, the European Commission and the International Monetary Fund -- will return to Athens in early September to resume talks as Greek Prime Minister Antonis Samaras seeks to hammer out 11.5 billion euros in budget cuts for 2013 and 2014.German Vice Chancellor Philipp Roesler, who drew international criticism last month for resurrecting the possibility of a Greek exit from the euro, told Focus magazine that such a scenario would be “manageable,” echoing a statement by Luxembourg Prime Minister Jean-Claude Juncker.“Hardly any of our offers have been taken up by the Greeks,” Roesler told Focus Aug. 11, referring to economic support put forward by the German government and industry.The ECB’s Coene said a Greek exit “would be the worst solution,” adding in the interview that “it would raise a question about euro membership for everybody, not only for Greece.”Oh well - the vacation was fun while it lasted. And now, as a complete tangent, here is a montage of Hitler repeating "nein" for 10 hours straight.
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