Ace of Spades HQ

February 08, 2010

Is Europe About to Melt Down?
— Ace

Although we're always told our problems were due to The Fiend Bush, seems that a lot of European countries are similarly situated. A lot of money is tied up in bad Spanish property.

The poorer European countries have a lot of debt they can't pay, and they can't use the typical means to avoid paying (printing money, borrowing even more money they can't pay) because they're in the Euro system, with their finances significantly controlled by German deficit/inflation super-hawks.

So basically they're just being told by Europe's central banks to lay off a significant fraction of government workers, stop safety net payments, etc. Bite the bullet, in other words.

Most of these countries will have to repudiate the Euro and drop out of that system.

But even if they do -- their situations are becoming more dire.

Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity Â– while admirable in one sense Â– is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes.

Thanks to AHFF Geoff.

Posted by: Ace at 08:29 AM | Comments (127)
Post contains 229 words, total size 2 kb.

1 I hope so. I can't speak European.

Posted by: Barry at February 08, 2010 08:32 AM (5I0Yr)

2 Gee, I hope so. Ever since studying the EU/EC while living in Paramus Paris in the early 1990's, I've predicted that the EU was a house of cards, Euro y compris. But I am somewhat surprised that it will have taken this long.

Posted by: ParisParamus at February 08, 2010 08:32 AM (REHQK)

3 hey, why don't we pool our resources here at aoshq and buy a villa on greece or maybe even an entire island!

Posted by: gomm at February 08, 2010 08:32 AM (Ibk1S)

4 that's "in greece",

Posted by: gomm at February 08, 2010 08:34 AM (Ibk1S)

5 Greece? Love it.

Posted by: Andi Sullivan at February 08, 2010 08:36 AM (MMC8r)

Those Europeans don't take kindly to any cuts in their generous pay & benefits packages. Or just benefits packages if they aren't actually employed.

There could be a whole new market created betting on where the riots will start, how big they will be, first injuries, number of cars barbequed per night, etc.

Posted by: Boots at February 08, 2010 08:36 AM (06JTY)

7 Greece is the word!

Posted by: John Travolta at February 08, 2010 08:36 AM (MNCFh)

8 Sing it Franky!:

Greece is the word that you've heard.
Its got debt
Its got someone else's currency.

Posted by: ParisParamus at February 08, 2010 08:37 AM (REHQK)

The possibility that tea-bagging Arkantuckysaw creationists will succeed in including Intelligent Design in school science curriculums is far more dangerous than a global economic meltdown.

Anyone who suggests otherwise is banned.

Posted by: Chalres Jonhson at February 08, 2010 08:38 AM (jmf9+)

Is Europe About to Melt Down?

In a word, they already have.

Posted by: Vic at February 08, 2010 08:38 AM (QrA9E)

11 Europeans live in their own alternate reality. F. Them.

They seem to be able to conveniently forget their own history.

Posted by: McLovin at February 08, 2010 08:39 AM (RwvN1)

12 Slow learners - it will still be Bush's fault.

Posted by: hexenkessel at February 08, 2010 08:39 AM (xjxU4)

13 This could domino to bring down the China fake positive government controlled economy which is the real scary part.

Posted by: polynikes at February 08, 2010 08:40 AM (W8glI)

14 So, how long before France and Germany run screaming from the EU? (Luckily for the Brits, their idiot politicians couldn't ram the Euro down their throats.)

Posted by: ECM at February 08, 2010 08:41 AM (nYKDd)

And the Greek civil service has made it clear that they will not tolerate any cuts.

Posted by: andycanuck at February 08, 2010 08:41 AM (2qU2d)

This could domino to bring down the China fake positive government controlled economy which is the real scary part.

So does that mean we don't have to pay back the money we owe China? Or will the billion plus Chinese take to their boats and storm California?

Posted by: Boots at February 08, 2010 08:42 AM (06JTY)

17 Fuck. /lives in Portugal

Posted by: iolanach at February 08, 2010 08:42 AM (2sozb)

18 [BTW, Ace, you dropped your text box.]

Posted by: andycanuck at February 08, 2010 08:42 AM (2qU2d)

19 Hey, even Soros' meddling didn't kill us off and we're not on the Euro. Sucks to be you guys!

Posted by: Hungary at February 08, 2010 08:42 AM (T0NGe)

20 But the important thing is, will Europe approve of us as it melts down?

Posted by: Filly at February 08, 2010 08:43 AM (FDfio)

And the Greek civil service has made it clear that they will not tolerate any cuts.

Posted by: andycanuck at February 08, 2010 12:41 PM (2qU2d)

I guess the Greek civil service just has to be nuked from orbit.

Posted by: AmishDude at February 08, 2010 08:43 AM (T0NGe)

22 Halliburton sold Spanish swamp land to the European Union! War criminal!!!11!1!

Posted by: average moonbat at February 08, 2010 08:43 AM (AZGON)

23 They should legalize pot and tax the crap out of it. That would solve all their problems. Prostitution too.

Posted by: Rocks at February 08, 2010 08:44 AM (Q1lie)

24 #10, they hide it very well, if they have.

Maybe if the EU melts down, the Dems will have one less odious quill in their [whatever quills are stored in...] to shoot? Or the opposite; Bush was so bad he even destroyed Paradise!

?

Posted by: ParisParamus at February 08, 2010 08:44 AM (REHQK)

I say we nuke the entire EU from orbit. It's the only way to be sure.

Posted by: Ellen Ripley at February 08, 2010 08:44 AM (MNCFh)

We will not be far behind them.

Can you say worldwide depression II?

Get ready to eat dog and live in cardboard Obama-villes.

Posted by: Vic at February 08, 2010 08:44 AM (QrA9E)

27 My gut tells me that while this is a dire scenario, it won't be the one that brings everything crashing down. It isn't the hand you're watching that steals your wallet.

Posted by: Joanna at February 08, 2010 08:45 AM (7+WuG)

Ha-hah!

Posted by: Nelson Muntz at February 08, 2010 08:46 AM (1fanL)

29 Europe is Socialist and loves Keynesian Economics. If they go down and go back to a Capitalist society, we can be the ones to say "Hey, the Europeans are doing so lets put the breaks on Obama's agenda."

Margaret Thatcher was right.

Posted by: Holger at February 08, 2010 08:46 AM (8NGHm)

30 23 They should legalize pot and tax the crap out of it. That would solve all their problems. Prostitution too.

Tried it. Doesn't work as advertised.

Posted by: Amsterdam at February 08, 2010 08:46 AM (T0NGe)

31 We're boned.

Posted by: Europe at February 08, 2010 08:47 AM (PD1tk)

32 Greece is the word
Greece is the word, is the word that you heard
It's got groove it's got meaning
Greece is the time, is the place is the motion
Greece is the way we are feeling

Posted by: AmishDude at February 08, 2010 08:48 AM (T0NGe)

33 Lest we jeer too much at the Greeks, lets not forget we have our own version of it here in the US. Its called California.

Posted by: Old Texas Turkey at February 08, 2010 08:48 AM (csST0)

34 Arrows go into quivers. On our march backwards through history to the glorious stone age the greenies crave, we may need to know this.

Posted by: Boots at February 08, 2010 08:48 AM (06JTY)

35 You know what we need? We need a transformative figure who is able to give rousing, inspirational speeches about the people being able to lift themselves up under his leadership.

What could possibly go wrong?

Posted by: Europe at February 08, 2010 08:49 AM (T0NGe)

36 Let them eat croissants.

Posted by: sifty at February 08, 2010 08:50 AM (fyOpG)

37 Tried it. Doesn't work as advertised.

Posted by: Amsterdam at February 08, 2010 12:46 PM (T0NGe)

Well then how about Gay Tourism, that's a huge boon. Is there any sodomy available in Greece?

Posted by: Rocks at February 08, 2010 08:50 AM (Q1lie)

38 And doh'bama wants us to be just like them. god, can someone hand him a clue?

Posted by: Mrs. Compton at February 08, 2010 08:51 AM (NaJ/S)

39 This is the way the world endsThis is the way the world endsThis is the way the world endsNot with a bang but a whimper.

Posted by: Holger at February 08, 2010 08:51 AM (8NGHm)

40 well if the ever so much smarter Europe is going to melt down, what's going to happen to us?!!!!

Posted by: phoenixgirl at February 08, 2010 08:51 AM (ucxC/)

41 Is there any sodomy available in Greece? Posted by: Rocks at February 08, 2010 12:50 PM (Q1lie) Is there anything else in Greece?

Posted by: Nevergiveup at February 08, 2010 08:51 AM (0GFWk)

42 Hey, ParisParamus... what was your favorite neighborhood in Paris?

Posted by: George Orwell at February 08, 2010 08:52 AM (AZGON)

43 Is there any sodomy available in Greece?

Some say its the only thing the Greeks do well.

Posted by: The Turks at February 08, 2010 08:52 AM (3EqY8)

44 Some say its the only thing the Greeks do well.

Posted by: The Turks at February 08, 2010 12:52 PM (3EqY

We think so as well.

Posted by: The Persians at February 08, 2010 08:53 AM (8NGHm)

45 Is there any sodomy available in Greece? Some say its the only thing the Greeks do well. It's nobody's business but the Turks.

Posted by: Constantinople at February 08, 2010 08:54 AM (AZGON)

One fundamental difference between Greece/EU and California/US: if the government unions go on strike and attempt to replace the government, Lenin-style, there's no army to stop them in Greece. If the California unions try it, it'll get squashed with such ease that the attempt will go down in history as a "quelled riot".

Posted by: Zimriel at February 08, 2010 08:55 AM (9Sbz+)

47 You know who this helps most?

Mitt Romney

Posted by: Hugh Hewitt at February 08, 2010 08:55 AM (eWtdM)

48 But I thought European socialism was the answer to all our problems.

Posted by: Mal at February 08, 2010 08:55 AM (Z+qzA)

49 Even though some of our actions in the past may have been arrogant, even derisive, we're prepared to extend a cooperative hand to our European partners and print as much money as they need. As long as they don't spend it in Vegas.

Posted by: President Toonces at February 08, 2010 08:55 AM (H6Jyg)

PIIGS ..

Portugal

Ireland

Italy

Greece

Spain

37% of the EU GDP, $2Trillion of sovreign debt that needs restructuring.

h/t zero hedge dot com

Posted by: Old Texas Turkey at February 08, 2010 08:55 AM (csST0)

51 But I thought European socialism was the answer to all our problems.

Posted by: Mal at February 08, 2010 12:55 PM (Z+qzA)

You still believe that!? HAHAHAHAHAHAHA!

Posted by: The Nazis at February 08, 2010 08:56 AM (8NGHm)

52 Maybe this One World Global Economy isn't working out so well after all, is it?

Posted by: BackwardsBoy at February 08, 2010 08:56 AM (i3AsK)

So does that mean we don't have to pay back the money we owe China? Or will the billion plus Chinese take to their boats and storm California?

I hope not. Don't know if my heart would really be into helping defend the left coast. Is it okay if I just start digging some spider holes outside of, hmm, how 'bout Reno?

Posted by: teej at February 08, 2010 08:56 AM (QdUKm)

54 Don't say we didn't warn you.

Posted by: Churchill, Thatcher, Reagan, Kennedy and others at February 08, 2010 08:57 AM (8NGHm)

55 I'm feeling better about turning down that tryst with the Euro.

Posted by: The British Pound at February 08, 2010 08:58 AM (AZGON)

56 You know who might be breathing a sigh of relief?

Turkey.

Posted by: Holger at February 08, 2010 09:00 AM (8NGHm)

57 Here in Lithuania, where my wife and I are serving for a year, the desire to link to the EU and the Euro have had major negative impacts recently. The EU's rules demand they close down the nation's number one power producing facility, a nuclear plant built on the same order as the one in Chernobyl. So at the first of the year they shut it down. The reverberations are devastating. First, they are losing revenue from the power they had been selling abroad. More acutely, the locals now must pay up to 30% more for electricity ... and it's killing them. The average monthly pay here is about 1500 litas a month. That's $600. If a person lives in one of the horrible Soviet-built "flats" they can maybe get by with 800 litas for rent. But that doesn't include utilites nor anything else. Beggars and old women selling flowers greet you everywhere. Restaurants are empty on Saturday nights. There is tension in the air. That nuclear power plant may well need to be dismantled, but the fact is, it's killing them to do it. I think the EU, while still attractive to most of the Baltic states and surrounding area, had better start showing some real return on the investment and soon or things could get bad in this neck of the woods.

Posted by: Expat at February 08, 2010 09:00 AM (4fc2a)

58 i figures like this, see: we all chip in, say 10 bucks, buys ourselves an island, don robes and branch out to airports where we spread the word for nominal donations. there's big bucks in cults. and we'll get great tans.

Posted by: gomm at February 08, 2010 09:00 AM (Ibk1S)

59 I hope not. Don't know if my heart would really be into helping defend the left coast. Is it okay if I just start digging some spider holes outside of, hmm, how 'bout Reno?

The Sierras make a better natural defensive line anyway. There'd be too many willing collaborators in the large coastal cities to make them worth defending.

Posted by: Hatchet Five at February 08, 2010 09:00 AM (3EqY8)

60 I have quite an ironic sense of humor, no?

Posted by: G-d at February 08, 2010 09:01 AM (LKkE8)

61 The Sierras make a better natural defensive line anyway. There'd be too many willing collaborators in the large coastal cities to make them worth defending.

Posted by: Hatchet Five at February 08, 2010 01:00 PM (3EqY

But if we retake them all the Liberals can die in collateral damage.

Posted by: Holger at February 08, 2010 09:04 AM (8NGHm)

62 I think the EU, while still attractive to most of the Baltic states and surrounding area, had better start showing some real return on the investment and soon or things could get bad in this neck of the woods. One wonders how matters can continue as they are. Will EU nations just decide to ignore orders from the EU government? Will EU nations just default on their debts? If the EU is truly a house of cards, there's already plenty of wind in the air. Furthermore, what happens if the US goes into a double dip freepression courtesy Teleprompter Jeebus? That won't do the EU much good either.

Posted by: George Orwell at February 08, 2010 09:06 AM (AZGON)

63 James Lileks! Call Your Office!! I think I spotted him in one of the cars.

Posted by: George Orwell at February 08, 2010 09:08 AM (AZGON)

Gee, who could have foreseen that the Bundesbank would come to dominate damn near everything and that would be a cause of friction since the Germans usually don't play the 2+2= A KAJILLION game in their monetary policy.

Hi, and welcome to the world of completely foreseen consequences.

Posted by: Circa (Insert Year Here) at February 08, 2010 09:09 AM (B+qrE)

20 But the important thing is, will Europe approve of us as it melts down?

That's some thread winner, right there.

Srsly, though, I have family in Greece. There are communist riots in every city. People are not getting paid for work. Crops are not getting turned out for market. They can't even get beer to the pubs in a timely fashion. It's so much worse than you've heard.

In France, the French government has given a payoff to every French media outlet to keep them from telling the real story of Muslim riots. Every French city is burning, every day and night. It's a nightmare.

Spain is on its last legs. It's too bad they didn't invest heavily in a green economy and bring their troops home. They should have elected a socialist.

Wait, nvm, Spain did all those things.

Posted by: Truman North at February 08, 2010 09:10 AM (e8YaH)

66 Lest we jeer too much at the Greeks, lets not forget we have our own version of it here in the US. Its called California.

Not to worry. If the civil servants in People's Republic of California start to riot and light cars on fire, rest assured that people will start defending their property, IYKWIMAITYD.

Posted by: David's not in San Diego at February 08, 2010 09:11 AM (MH3KC)

67 "63 Clearly, the situation in Europe was inherited from the last 8 years of mismanagement in the United States.

Posted by: Timmy Geitner at February 08, 2010 01:06 PM (V9SYy)"

Wait, what did I miss? Didn't all the money go there?

Posted by: R A M at February 08, 2010 09:11 AM (p302b)

68 PIIGS? I love them slaughtered and slow roasted. Guess what I do with the Greece.

Posted by: Zombie Nero at February 08, 2010 09:12 AM (C39a6)

69 there's only one solution to this dire situation: Peace Blimp

Posted by: KilltheHippies at February 08, 2010 09:13 AM (VKfXw)

Revolution in California?

Mmmm mmm mmmm

Posted by: Zombie George S. Patton at February 08, 2010 09:14 AM (C39a6)

IYKWIMAITYD.

Still haven't figured out what that means. Come on, help an old guy out would ya? And no, I don't text either.

Posted by: teej at February 08, 2010 09:14 AM (QdUKm)

72 Over at BELMONT CLUB, we have been discussing the recent G7 meeting in Inqaluit, Nunavuut, Canada where they discussed the Greek situation. Yeah, that is where it was. One commenter described it thusly: The meeting was held in Iqaluit? You have GOT to be kidding. Have any of you ever been there? What was the problem? Was Hell already booked? I had to overnight there once while ferrying an aircraft from the U.S. to Sweden. Minus 43 degrees celcius. Howling wind driving the wind chill index to minus 100 degrees celcius. Blinding, driving, snow. Few services. The only hotel was part of an enclosed shopping center. Believe me, seeing foot-long strands of Inuit hair on the floor, from the barfights in the hotel, at 0430 is not the best way to start your day. The reason for the .... unique ... location was the fact that unlike normal G7 meetings, this one would have no demonstrators; since the only thing blocking the wind from the North freaking Pole is an occasional polar bear turd. In any case, there was a report about the meeting that details just how totally scrod [past pluperfect subjunctive] the EUnuchs are. http://tinyurl.com/yln9yb7 I threw in some comments on one of the threads that you may find interesting [or not], and at # 106 I posited that since the EU has assumed sovereignty from the member former nation-states; it is now faced with a choice between dissolution, or marshalling military force to coerce the PIIGS states [Portugal, Italy, Ireland, Greece, Spain; the ones closest to bankruptcy] to obey its edicts about austerity. Bring popcorn. http://tinyurl.com/yl8exch Just fyi, "Marie-Claude" is a Frenchwoman who still holds a grudge against us for making peace with the British after the Revolution and not making DeGaulle Supreme Allied Commander in WW II; and for whom France and the EU can do no wrong, as opposed to the hated Anglo-Saxons. "Mr. X" is someone we have pretty much figured out is one of our Russian SVR trolls. Both are regulars. Subotai Bahadur

Posted by: Subotai Bahadur at February 08, 2010 09:14 AM (PkKjV)

73 I pity the repercussions, but a lot of fundamentals over there just suck. You can't make a big silk EU purse out of PIIGS ears.

Posted by: Feh at February 08, 2010 09:16 AM (BdTqm)

74 Greece? heh. California wishes it was in that good of shape.

Posted by: Guy Fawkes at February 08, 2010 09:16 AM (2sJK0)

75 72 IYKWIMAITYD. Still haven't figured out what that means. Come on, help an old guy out would ya? And no, I don't text either.

"if you know what I mean and I think you do"

Posted by: Anachronda at February 08, 2010 09:17 AM (3K4hn)

"if you know what I mean and I think you do"

Thanks anachronda, I do now. So, what's life as an extremely large snake like?

Posted by: teej at February 08, 2010 09:18 AM (QdUKm)

77 Teej: If You Know What I Mean And I Think You Do

Posted by: battyoldlady at February 08, 2010 09:19 AM (0ulLP)

78 Must Hit Refresh Before Posting. What Anachronda said (a timely big snake?)

Posted by: battyoldlady at February 08, 2010 09:21 AM (0ulLP)

Posted by: battyeautifuloldlady at February 08, 2010 01:19 PM (0ulLP)

There, FIFY. And thanks.

Posted by: teej at February 08, 2010 09:21 AM (QdUKm)

80 72

IYKWIMAITYD.

Still haven't figured out what that means. Come on, help an old guy out would ya? And no, I don't text either.

It's an acronym: If You Know What I Mean (And I Think You Do). Usually said with a knowing wink and a joking elbow in the ribs.

Posted by: Joanna at February 08, 2010 09:22 AM (7+WuG)

81 PIIGS?

Raaaaaaaaaaaacist!

I was so offended, I paused in torching this car.

Posted by: European Muslims at February 08, 2010 09:23 AM (T0NGe)

82 James Lileks! Call Your Office!! I think I spotted him in one of the cars. Posted by: George Orwell It would be nice if I paid attention to which thread I'm posting. I'm just another effing retard.

Posted by: George Orwell at February 08, 2010 09:23 AM (AZGON)

83 Awwwww! Thank you, Teej. *blushes*

Posted by: battyoldlady at February 08, 2010 09:24 AM (0ulLP)

84 "metastasised into a wider systemic crisis."

Dude, we're morons. Quit with the thesaurus, already.

Posted by: notropis at February 08, 2010 09:25 AM (KQS/7)

85 "Well then how about Gay Tourism, that's a huge boon. Is there any sodomy available in Greece?" Tried it. Doesn't work.

Posted by: The Sheep at February 08, 2010 09:25 AM (VrNoa)

86 Of course they're melting down. It's GLOBAL WARMING!!!11!!!

Posted by: FUBAR at February 08, 2010 09:29 AM (1fanL)

Posted by: teej at February 08, 2010 01:14 PM (QdUKm)

Been there, teej. I'm not into texting, but when I get lost like this, I go to Scroogle.org (a Google overlay that doesn't provide any per click revenue to zero's buddies) and type in said acronym and something usually pops up. It's faster than going to "texting acronym" sites.

Posted by: RushBabe at February 08, 2010 09:30 AM (LKkE8)

88 "metastasised into a wider systemic crisis."

Dude, we're morons. Quit with the thesaurus, already.

It's bad.

Posted by: Methos at February 08, 2010 09:30 AM (Xsi7M)

84 Awwwww! Thank you, Teej.

A pleasure m'lady. (and capitalizing my handle is like calling me sir. I'm just the local flunky around here)

Posted by: teej at February 08, 2010 09:32 AM (QdUKm)

90 73 Over at BELMONT CLUB, we have been discussing the recent G7 meeting in Inqaluit, Nunavuut, Canada where they discussed the Greek situation. Yeah, that is where it was. Amazing. Where are the moonbats protesting the secrecy and inaccessibility of the meeting? /rhetorical off This looks pretty frightening.

Posted by: George Orwell at February 08, 2010 09:34 AM (AZGON)

91 Dude, we're morons. Quit with the thesaurus, already.

It's bad.

I'm fuzzy on the whole good-bad thing. Whattya mean 'bad'?

Posted by: brian at February 08, 2010 09:37 AM (/gJHx)

92 Europeans are fucking retards. They shouldnt let this crisis go to waste!

Posted by: Rahm Emmanuel at February 08, 2010 09:38 AM (6uiF7)

93 My latest conspiracy theory, although there is some evidence, is that the US govt has been manipulating the stock market to keep it around 10,000. If so, it could get interesting if European sovereign defaults happen.

Posted by: Guy Fawkes at February 08, 2010 09:39 AM (2sJK0)

I'm fuzzy on the whole good-bad thing. Whattya mean 'bad'?

Joe Biden with the football.

Posted by: Circa (Insert Year Here) at February 08, 2010 09:44 AM (B+qrE)

95 Maybe we can loan 'em Obama. He fixed America, after all.

Posted by: katya at February 08, 2010 09:45 AM (Sj+xC)

96 The greasy haired BO mouthpiece is back on CNBC. She is there to "discuss" if "WS should 'dump the dems'? I refuse to put the sound on and listen to her shrill voice but it occurs to me that this is a diversion.

Posted by: R A M at February 08, 2010 09:46 AM (p302b)

brian I'm fuzzy on the whole good-bad thing. Whattya mean 'bad'?

Imagine a Twinkie that costs two trillion euros and is filled with garlicky Greek feces, and imagine fat bureaucrats in Brussells telling a bunch of angry underemployed East Germans they're going to have to eat it.

That's bad.

Posted by: Zimriel at February 08, 2010 09:46 AM (9Sbz+)

98 Posted by: Guy Fawkes at February 08, 2010 01:39 PM (2sJK0)

Please to explain?

Posted by: R A M at February 08, 2010 09:47 AM (p302b)

99 #95 Guy Fawkes [the only man to ever enter Parliament with honorable intent!] the US govt has been manipulating the stock market to keep it around 10,000. There is a thing called the "Plunge Protection Team" that was created years ago to try to moderate wild swings in the market. Since January, we have intermixed the markets and the Treasury/Federal Reserve so much that they now have functionally a 10" main tap into the Treasury. I am assuming that they are desperately trying to keep the inevitable double dip at bay. I have noticed that "rallies" frequently tend to happen around 1030, 1330, and 1530 hrs. Eastern Time. I don't know if it is programmed trading by real traders, or if those are the time hacks used by the PPT. Subotai Bahadur

Posted by: Subotai Bahadur at February 08, 2010 09:50 AM (PkKjV)

100 Yeah, but if the Euros have economic collapse at home, a lot of them will repatriate their money, causing a crash of the dollar - or at least that's what these guys think

http://www.aftershockeconomy.com/

They actually think the US economy still has good fundamentals, and will be the best of a bad lot in the long term, but that a strong dollar will not be part of that equation.

Posted by: Holdfast at February 08, 2010 09:51 AM (Gzb30)

101 Let them eat baklava!

Posted by: Brussels at February 08, 2010 09:52 AM (ocHBO)

102 #102 Holdfast A lot will. I would suspect that the smart ones will be trying to convert their money into anything but Euros, move it safely out of reach of Brussels, and join it. Subotai Bahadur

Posted by: Subotai Bahadur at February 08, 2010 09:54 AM (PkKjV)

103 Can our honorable and wise government sink its foot in this EU mess? Perhaps it can. If the EU central bank still holds any lousy US agency debt, that is, specifically trashy FNMA or FMAC bonds, it can doubtless expect Obama's boy Timmy to swap out those trashy bonds with Treasuries, sticking us with junk debt and leaving the EU with more solid Treasury debt. There was a lengthy but enlightening article on seekingalpha.com by Chris Martenson back on August 26, 2009,"How The Federal Reserve Is Monetizing Debt." These are the three critical points to remember as you read further: 1. The US government has record amounts of Treasuries to sell. 2. Foreign central banks, which have a big pile of agency bonds in their custody account, would like to help but want to keep things somewhat under the radar to avoid scaring the debt markets. 3. The Federal Reserve does not want to be seen directly buying US government debt at auctions (and in fact is not permitted to, but many rules have been 'bent' worse during this crisis), because that could upset the whole illusion that there is unlimited demand for US government paper, but it also desperately wants to avoid a failed auction. For various reasons, the Federal Reserve cannot just up and start buying all the Treasury paper that becomes available in record amounts, week after week, month after month. Instead, it uses this three-step shell game to hide what it is doing under a layer of complexity: Shell #1: Foreign central banks sell agency debt out of the custody account. Shell #2: The Federal Reserve buys those agency bonds with money created out of thin air. Shell #3: Foreign central banks use that very same money to buy Treasuries at the next government auction. later on in conclusion: The Federal Reserve has effectively been monetizing far more US government debt than has openly been revealed, by cleverly enabling foreign central banks to swap their agency debt for Treasury debt. This is not a sign of strength and reveals a pattern of trading temporary relief for future difficulties.

Posted by: George Orwell at February 08, 2010 09:56 AM (AZGON)

104 new movie: "My Big Fat Greek Wedding Default"

Posted by: curious at February 08, 2010 09:58 AM (p302b)

105

Mmm. Twinkie filled with garlicky Greek feces.

Posted by: homer simpsonopolis at February 08, 2010 10:01 AM (2qU2d)

106 "RBS Employee Fired For Awarding Himself Unauthorized Bonus"

Posted by: curious at February 08, 2010 10:02 AM (p302b)

107 Let them eat Twinkies filled with garlicky Greek feces.

Posted by: katya at February 08, 2010 10:13 AM (Sj+xC)

108 Quick, we better bailout European countries too.

Posted by: MlR at February 08, 2010 10:17 AM (BwnDo)

109 Oh, I forgot - good riddance to the Euro and EU if that's the case.

Posted by: MlR at February 08, 2010 10:19 AM (BwnDo)

110 106 new movie: "My Big Fat Greek Wedding Default"

The drachma drama

Posted by: Packy East at February 08, 2010 10:21 AM (CKW49)

111 #102 I agree with #104.

I think this will strengthen the dollar, because Barry has failed to destroy the country so far and there really is NO other place half as stable as the US. Canada? What half their GDP is natural resources, oil, gas, mining. That goes south, no demand, the Lune goes with it.

We take back one house this fall, and the economy goes wild, like '94!

This is temporary. We are still going to have to inflate the dollar, question becomes are we inflating less or more than the other moron nations?

Bottom line, we're fucked. Damn you George Bush, even in Texas you are still ruining the nation. Leave Barry alone!

Posted by: Kemp at February 08, 2010 10:24 AM (2+9Yx)

112 Prager says he doesn't want a society where the primary pre-occupation is where to go on vacation.

THATS THE EU. Let them fail big.

Posted by: ParisParamus at February 08, 2010 10:26 AM (REHQK)

113 Subotai Bahadur:

Into what, greenbacks? Maybe Gold and Swiss Francs?

Not sure what to make of the Canuck Buck in this crisis - normally it is just a leveraged play on the $US, and the Ontario manufacturing industry is in the GM Toilet, but high resource prices and western extraction of said resources have kept the Canadian economy afloat pretty well.

Posted by: Holdfast at February 08, 2010 10:27 AM (Gzb30)

114 Not according to some arrogant liberal douschetool who recently wrote a book on how Europe like, totally rocks and is the model the US should be following for prosperity, free stuff, luxury time, long siestas, and kick ass universal health care for everybody!

Posted by: Mr. Happy at February 08, 2010 10:27 AM (waaUg)

115 Release the Kraken!

Posted by: Poseidon at February 08, 2010 10:49 AM (9Sbz+)

116 To allude to someone's comment about a strenghtened U.S. dollar not being in the equation: perhaps that's the goal?

Posted by: unknown jane at February 08, 2010 11:19 AM (5/yRG)

117 CNBC.com has a slideshow featuring the biggest debtor national governments. They start with thh United States and, in order of increasing debt as percentage-of-GDP, wind up with Ireland. (Their debt is over 1,000% of its GDP. Except for Hong Kong, I think every other country on the list was in Europe.)

Posted by: FireHorse at February 08, 2010 11:20 AM (cQyWA)

118

The CNBC slideshow to which FireHorse refers is linked on my name.

FireHorse errs in that that this 1267% isn't a "national government", sovereign debt. This 1267% is the total debt of everyone in Ireland. The sovereign debt of Ireland is "just" ~60% of GDP, last I looked.

It looks to me like the Irish are screwed.

Posted by: Zimriel at February 08, 2010 11:38 AM (9Sbz+)

119 Lots of hilarious posts here...

Did y'all know that the FED bought 80% of our treasuries last year?

As usual, Europe is just ahead of us...we'll catch up soon enough.

Still funny?

Posted by: oh, Hi Mark at February 08, 2010 12:10 PM (oXZ3b)

120 The writing was on the wall for Greece ten years ago. All anyone needed to do was look at a graph and see their entitlements would exceed their income within a few years. The EU froze like deer in the headlights, but now they can't ignore it any more.
Japan is in much the same situation. The government has propped up the banks for nearly 20 years using every trick in the book, but with exports down, the plan is coming unraveled. If I was knowledgeable about currency futures, I'd short the yen.
I wonder how long the politicians in America are going to ignore their countrys' own graphs?

Posted by: Nemo from Erewhon at February 08, 2010 02:16 PM (urqj2)

121 I wonder how long the politicians in America are going to ignore their countrys' own graphs?

As long as the majority of the voters do - which is to say, until the situation smacks them in the face. At which point they're more likely to make the situation worse than improve it.

Posted by: MlR at February 08, 2010 02:25 PM (BwnDo)

122 Ruble>$>Euro. Suck it Yankee pigs!

Posted by: Nikolai Volkov at February 08, 2010 02:48 PM (44J/C)

123 122

What a bunch of maroons! They should follow our lead and just double their exports!

Posted by: s☺mej☼e at February 08, 2010 03:40 PM (JZa9d)

124 118 To allude to someone's comment about a strenghtened U.S. dollar not being in the equation: perhaps that's the goal? Posted by: unknown jane at February 08, 2010 03:19 PM (5/yRG) Oh, the Dollar will strengthen - in 2012. Until then, hang on tight.

Posted by: CoolCzech at February 08, 2010 04:42 PM (QECjC)

125 What country is Europe in, anyway?

Posted by: CoolCzech at February 08, 2010 04:43 PM (QECjC)

126

When I told you the Glaciers were melting, I meant to say Europe is melting. Yes, That's The Ticket. Now lookee here. I got some carbon credits to sell you, and since you are my friend, I will cut you a deal. Capiche? Kindly deposit your US federal reserve notes in the bank of AlGore (no Euros please) and presto all will be fixed soon. Trust me.

Posted by: ManBearPig at February 08, 2010 05:33 PM (UPNlB)

127 Sorry if this was posted earlier: Germany is preparing to bail out Greece ( Times Online )

Posted by: o.u. at February 09, 2010 03:12 PM (g50sr)

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