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Monday, 28 November 2011

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"in the morning I will be taking my left-over-from-holiday euros, approximately e23.50, to the bank to swap them back into sterling"

Had you not been exchanging Sterling for vatloads of their local refreshment throughout the summer, the whole system would have collapsed by now. Have you been giving the poor PIIGS false hopes?

Guilty, m'Lud, I put it down to the strain of constant blogging.

(Someone explain to the old fool what 'blogging' is!)

I was going to invest some sterling in Italian wine the other day but then I noticed a two-for-a-tenner on Australian Merlot and decided my Antipodean relatives were more deserving, (despite their voting for Julia).

AEP’s concept is very interesting: -

1. Fed buys Club Med bonds

2. US dollar devalues, thereby improving US competitiveness and growth. Downside is inflation, but the twist is that the inflation would be in the Eurozone! This is because all the dollars would stay in the liquidity starved Euro area. The US pulled this number on the Chinese recently: printing dollars and buying Chinese assets. It set off a bout of inflation in China that brought them to the negotiating table on the subject on letting the Chinese currency appreciate.

3. Euro goes through the roof. Jerries outraged (like the Chinese were) because they can’t export their Beamers anymore, and economic activity virtually ceases in the Club Med countries. And two juicy ironies into the bargain: -

a. Even though the Eurozone will disintegrate economically, it will remain liquid and solvent - sort of a fate worse than collapse: eternal stagnancy - but targeted just inside the Eurozone!

b. The Jerries wouldn’t be able to retaliate by buying US bonds or other junk bonds because of their own ECB rules, applied with Teutonic efficiency, to stop Club Med bond bailouts – oh the irony!

4. Fed keeps buying Club Med bonds until the Jerries throw the towel in and disband the Euro.

5. Orderly disbandment of the Euro.

Isn’t that exactly what we want?

And if you think about it, it’s only doing what a country does when it has a central bank and a currency (i.e. unlike the Eurozone) and is in this situation, because it’s the only thing to do, namely: print, devalue, inflate the debt away and rob savers. This is exactly what BoE and HMG are doing now: BoE is buying UK bonds. If we don’t do that, HMG and the banking system goes bust and we rob savers anyway with no upside.

The only difference in AEP's concept is that it’s a cross-border monetization of the debt, and it’d be the Jerries who suffer the stagflation and the US that gets the competitiveness and growth.

Can’t that be sold politically?

All very 'slick Willy', Lawrence, but I don't think the headline "Fed Buys Euro Bonds" would read well on Main Street with an election due in 12 months. We must always remember that, on the whole, the Yanks do not like Europeans in general and, as it happens, Brits in particular. Anyway, it's all too late because I think (could be wrong, often am, as you know well!) it is now a matter of weeks/months before the 'le crunch'.

Kevin, make mine a large glass, please!

Damn you & your market moving euro currency sale.

On a (slightly) different tack, & for those of us who subscribe to the view that history has shown that certain nations repeat their actions which bring about their downfall - isn't there a parallel between the last few months of
the Deutsches Reich & what is currently happening under the wise gaze of Frau
Merkel ? I refer of course to the grim resolution currently displayed by the German Authorities/Frankfort Gruppe to see the "Current Difficulties" through
to the bitter end...

Kind regards

Or, 'to the last man', a phrase beloved of politicians hoist in their own petard.

When 'le crunch' comes the choice will be (a) an international banking system with Fed purchase of Club Med bonds, or, (b) no international banking system.

When the cash machines close down across America, I feel the USA will open it's innings in the 21st century and deliver the first of what it did 3 times in the 20th: a rescue of its old Mother and Fatherland.

Looking after the decrepit and dribbly parents is one of those burdenable burdens. I think they like it really. Makes them feel all superior and worthy. And you have to say, they're bloody good at it.

SoD

"the decrepit and dribbly parents" - Oi, watch it!

Virtually impossible to guess exactly how it will happen. My best guess is that the weaklings will be cast off and told to revert to their old currencies and 'do an Argentina'. Quite whether the central 'stronger'(?) bloc will then hold I just don't know. Big problem is the number of banks and businesses, in Europe and elsewhere, which will be clobbered in the fall-out because they hold too many euro-denominated bits of worthless paper.

The other factor whose strength should never be under-estimated is the fervor with which this European idea has seized the minds of the politicians. They will hurl defiance in the face of adversity to keep their dreamboat, SS Euro-Titanic, sailing along.

Bismerckel

Well done Kevin. You'll be much happier with the Aussie brew.

I did not vote for Ms G!

Eh, David? That little reply you made to Lawrence back up there at 1933? I think it was, "All very 'slick Willy', Lawrence, but I don't think the headline "Fed Buys Euro Bonds" would read well on Main Street with an election due in 12 months."

Well. Guess what?

http://bottomline.msnbc.msn.com/_news/2011/11/30/9113897-fed-global-central-banks-move-to-boost-financial-system

You beat me to it JK! : -

Better than a formation of Superfortresses over Berlin.

Keep stoking up Eurozone inflation like that and we'll have Jerry on the run before Xmas.

SoD

Alas Lawrence, you beat me to "decrepit and dribbly"

Instead of Superfortresses over Berlin dropping bombs, we have Milton Friedman's helicopters dropping dollars! (Does this wonderful metaphor know no limits!)

At last, the US and a coalition of the willing realizes it has a war winning weapon with which it can: -

1. Improve US and the willing's competitiveness and growth
2. Destroy Eurozone competitiveness and growth
3. Fuel Eurozone inflation
4. Force the Jerries to disband the ludicrous Euro due to 2 and 3
5. An orderly disbandment of the Euro (orderly because although fiscally uncompetitive and contracting, the Eurozone will be liquid and solvent).

Go America!

I can't wait to see the expression on the faces of Merkel, Schauble, Junckers et al when the realization dawns that the game is up, and they won't be taking the world down with them.

Time for one last ditch "Ardennes offensive"? No doubt, but the end game will still be the same: suicide in the bunker.

SoD


The best/worst is yet to come:

"Michael Hewson, market analyst at CMC Market, said: "It gives an indication that monetary authorities are prepared to do what is required to stop a freeze up in the funding markets. But, basically all they are doing here is QE (quantitative easing) on steroids. It does not deal with the underlying issues."


Yes, it's cross-border QE.

The greenbacks dropped from Friedman's helicopters won't be going back over the pond any time soon, so desperate are the Euro banks for liquidity and balance sheet solvency. But the PIIGS will spend all theirs, thereby creating rampant inflation in the Eurozone only.

Eventually the green backs will make their way back to the land of the free, and then there will be inflation there too. But fighting Jerry economically or militarily there's always a price to pay; the dead and wounded made the same journey.

SoD

Well DD, don't know if you Islanders have an equivalent expression, but here we'd call it a Hail Mary Pass.

But, should it not win a re-election, we'd call it a punt resulting in a runback for a TD.

(However - given the current field - ... well, I know you understand pyrrhic.)

I just wish those helicopters would drop a few greenbacks in my back yard!

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