July 24th, 2014
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Markets Wax Exuberant Over Latest Eurodrivel

by Rick Ackerman on November 14, 2011 12:01 am GMT · 22 comments

Stocks came roaring back to end the week on an ebullient note, supposedly encouraged by the latest evidence that Europe is finally putting its financial house in order.  While the New York Times resisted the temptation to spread this drivel across the top of its weekend editions, the Wall Street Journal eagerly took the bait, offering up the following headline:  “Europe Pulls Back From Brink”.  Time for a victory lap for Europe?  Not so fast. While we’d like to think that somewhere in the nearly 800 words that followed, the four Journal reporters credited with writing this mush-up would have provided some further details of the latest “plan” to “save” Europe, no such details were forthcoming. As far as we could determine, the manic buying spree that lifted the world’s bourses on Friday took its inspiration from whatever ephemeral hopes attach to the political ousters of top leaders in Italy and Greece. Perhaps that’s why the Journal went no deeper than a single quote from some hedge-fund dorkwad  to substantiate the premise of a headline saying that Europe had “pulled back” from the brink. Here’s the quote, in case you, too, are looking for a reason to buy stocks come Monday:  “Hope for better management in Greece and Italy is causing the market to breathe a bit of a sigh of relief.” That’s it. Re-read the story a dozen times and you’ll find no further explanation.

Recall that earlier in the week, the speculators and algo traders who have come to dominate the world’s bourses sold the Dow Industrials down nearly 400 points in the space of a few hours,  joining in a global avalanche that caused hundreds of billions of dollars worth of valuations to evaporate. So why the sudden leap of faith on Friday?  We’ll probably never know. In fact, most of the Journal story was devoted, not to Europe’s pulling back from the brink, but to vexatious fluctuations in France’s borrowing costs. They jumped last week when a supposed “technical error” caused the country to briefly lose its triple-A credit rating. Trouble is, yields failed to return to “normal” levels even after the bumbling halfwits at Standard & Poor’s announced that they had corrected the “error.”  Of course, even small errors can matter gravely here, since France is being represented as Germany’s co-equal in various Rube Goldberg schemes to bail out Europe. France has committed itself to 158 billion euros worth of “guarantees,” and although a guarantee is “money” these days only in the most dubious political sense and in the eyes of the news media, France’s effectively worthless guarantee would be worth even less if the nation’s mythical credit rating were subjected to a downgrade, however slight.

Fearful Yields

How, then, do we account for the fact that French-bond yields have gotten stuck at mildly fearful levels even though the country’s triple-A rating was quickly retrieved by some clerk?  On this question, the Journal was more helpful:  “That yields haven’t since dropped again suggests investors believe the erroneous statement may still indicate the future direction of France’s rating.” Ahh, so that’s it!  It would seem that France need only manage investors’ expectations more skillfully to squelch rising yields.  On that score, budget minister Valerie Pecresse had an answer that should reassure us all:  “This error is inexcusable and clearly raises the question of having much more regulation of rating agencies,” said Pecresse. Indeed.  With any success, perhaps the bankers will move this campaign in a more positive direction, emphasizing “Hope and change!” as a theme for 2012.

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{ 22 comments }

Seawolf November 14, 2011 at 3:30 am

Ms. Merkel and Mr. Sarkozy will reveal their grand plan as soon as they find the elusive “Greater Sucker” to buy whatever they are selling, however, this “Greater Sucker” has apparently left the casino and they hope to lure him back by changing the dealers at the Greek and Italian tables.

Burly Cain November 14, 2011 at 4:15 am

The greater sucker is likely the first ones to agree to hope and change.

mario cavolo November 14, 2011 at 4:17 am

The only thing that anyone could possibly be selling is to follow the path of the U.S., which is to issue more money to recapitalize the system, which is ultimately inflationary yes?; rather than collapse, continued inflation will rule the day, shall I say the future and why should this surprise anyone at all? Austerity is nothing more than a bad joke MSM talking point when its the bureaucrats and elitists who swindled away all the money.

Because of the U.S. top dog economic position built on its middle class, they are the ones who will bear the brunt of this global economic direction’s impact and who will be most psychologically damaged from such a change from economic stability; followed by the lower and middle income pop. of China, a very very large constituent of people on low incomes with rising daily prices, but who will suffer far less psychological damage because they are much more used to living 3 families to an apartment. And everyone else, including the folks who are driving this trainwreck??…George Carlin got it right…

Cheers, Mario

mario cavolo November 14, 2011 at 4:38 pm

Re the A&G report, if collapse is coming, how will that play out as / if the the Fed and ECB decide to print an extra trillion or two to recapitalize prevent a collapse ? In other words, for example, if an Argentinian style devaluation, how does that work, how would that work for a Euro or U.S. sized event…? Can anyone really intelligently fathom how this may play out?…I certainly can’t imagine it other than to think that any kind of “collapse” event is going to have consequences far worse than any idealistic notion of it wished for…

Cheers, Mario

mike November 14, 2011 at 4:35 am

Mr. Lucas Papadimos,From 1994 thru 2002 he was governor of the Bank of Greece, and from 2002 to 2010 VP of the European Central Bank. He was the Greek central bank head EXACTLY when the Greek government and Goldman Sachs were jimmying the books so Greece could pass the test & get into the euro.
He was working at the ECB when the euro was beginning to unravel.Trained at the Massachusetts Institute of Technology, & taught economics at Columbia University.He was also senior economist at the Boston Federal Reserve in 1980. From 2002 to 2010 he worked with ECB head Jean-Claude Trichet, who fouled the euro’s nest, did nothing to clean it up, then retired.Since 1998 Papadimos has been a member of the Trilateral Commission.

The Italian fixer, Mario Monti? Economist, did graduate work at Yale, was a professor and chairman of a think-tank.He is European CHAIRMAN of the Trilateral Commission and a leading member of the Bilderberger Group.An international adviser to Goldman Sachs and The Coca-Cola Company. He is also a former European Commissioner for “Internal Market, Financial Services & Financial Integration, Customs, & Taxation.he hobnobs with the likes of Jacques Delors & Daniel “Danny the Red” Cohn-Bendit in the Spinelli Group, founded to force further centralization on the European Union.

Seawolf November 14, 2011 at 5:37 am

The pawns are being sacrificed and major pieces are being brought into play on the grand chessboard.

Aussie Mick November 14, 2011 at 9:07 pm

You nailed it…two Euro leaders out…two criminal bankers replaced them…NWO has to love it. Here in Australia…we have a Fabian Witch as PM…donating money to the IMF and telling G20s how to get their economies in order…while driving the Aussie economy into the dirt. Leading the world by introducing a carbon tax…allowing the banks to get their hands on the super funds..and guaranteeing their losses. There may be worse criminals than the Trilateral Commission…maybe the CFR…CIA…Rockefeller…Rothschilds…NATO…UN…The Queen of England and her eugenist retard husband…the Too Big To Fail Banks…the list of criminals goes on…The Fed would have to be right at the top. As I see it…If the US has any hope….Ron Paul is it…trouble is…anyone ..or any country that gets in the road of the globalists…is dead. Syria is next..then Iran…imagine ..having the cheek to trade oil outside of the $US…that is like committing suicide…ask Gadaffi…Hussein…

John Jay November 14, 2011 at 4:43 am

Everyone knows the Western economic system is bankrupt. At six or seven percent no one in Europe or the USA can even service their sovereign debt, let alone pay back the principal. There can never be enough real (manufacturing) jobs for a world population of seven billion people. It can only end badly with money printing, trade wars, inflation/deflation and very likely a “Dr. Strangelove” ending to it all. As if our military is not spread thin enough, we are sending troops to Australia to counter China’s ambitions. Typical of our government, first create a problem, then act surprised at the resulting consequences, and implement a solution that makes matters worse. So let’s see, we have created a witches brew in MENA, SE Asia, Central America, S America, Europe, Af PAkIraq. Not happy with all that, now we have opened military operations in Africa proper and are playing chicken with China and Russia over Iran. As Slim Pickens character put it in “Dr. Strangelove”, “Nuclear combat, toe to toe with the Russkies!” And as George C Scotts character opined in the “War Room”, “Mr President, if we hit them with everything we’ve got, we’ve got a damned good chance of catching them with their pants down! Our war games have predicted civilian casualties for us at 20 to 30 million, tops!” Sounds bullish for Wall Street, doesn’t it?

Ian November 14, 2011 at 10:20 am

Great analysis John Jay, I live here in Australia and I think you are right. China have us right in their sights and the sub-morons running our country keep sucking up to them begging them to buy all that we have left, minerals. We’ve trashed everything else. One day either China or Indonesia will just come in a scoop up whatever is left.

John Jay November 14, 2011 at 3:22 pm

Right Ian. The Chinese are very patient and after we bankrupt ourselves with oafish military adventures that are making the USA an international pariah, they won’t even need to occupy Australia. As long as the flow of raw materials keeps flowing out, why go through the expense and bother of a military takeover? The Chinese must be having a good laugh at Obama and Congress talking about the undervalued Yuan. Our trade imbalance with China has been on going government policy since Nixon’s administration got the ball rolling back in the 70s.
Now DC talks about the military and economic threat China has become. After they created that monster.
I think Australia will be maintained by China for raw materials and as a quaint tourist destination.

mario cavolo November 14, 2011 at 4:19 pm

Indeed John Jay the idea that China is a military threat is no less than a bad joke…amongst the greatest misdirections of them all…Cheers, Mario

roger erickson November 14, 2011 at 3:54 pm

Some quotes from the Roosevelt’s come to mind:

Teddy nailed things, 100 years ago.
“The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life. ” Theodore Roosevelt

“To educate a man in mind and not in morals is to educate a menace to society. ”
Theodore Roosevelt

“Repetition does not transform a lie into a truth.“
FDR http://www.quotationspage.com/quote/3248.html

Bankers:
“They only know the rules of a generation of self-seekers. They have no vision, and where there is no vision the people perish.” FDR

ken horn November 14, 2011 at 5:26 pm

Rick, you are dead on. Your cynicism is dripping & for good reason. This is a perfect case of the man getting caught in bed with his mistress by his wife & saying “do you believe me or your lyin’ eyes?” The eurozone is in recession & it will get worse.( This is a given, op-eds notwithstanding). This, in turn, will affect the US & of course China, the great exporting machine. All the spin in our media as well as the clowns across the pond won’t change the facts. Here at home in the “good economy” we are about to cross $15T in debt, the housing debacle has a ways to go before hitting bottom, and a feckless “super committee” that will accomplish nothing. Fasten your seat belts, it’s going to be a bumpy ride.

redwilldanaher November 14, 2011 at 6:06 pm

A very enjoyable read Rick. We are simultaneously living in the great age of nothing matters and the great age of nothing is everything.

nonplused November 14, 2011 at 6:24 pm

The markets are rigged. No point trying to figure it out.

mava November 14, 2011 at 7:02 pm

Rick,
“Rube Goldberg schemes” – precisely said. The world is eating through it’s capital, and no manipulation or a pretend game is going to change that.

Every time a dollar or euro or other currency unit is printed, that amount of value is counted on two books, until the government wastes it. From there on, the ghost value continues to be on the original book, and it prevents the estimation of how much of the capital was stolen and wasted.

If, the governments were to announce true loss of purchasing power as a result of their theft, then yes, the people could figure that in their (often unconscious) estimates of remaining capital, and adjust their spending-saving-producing patterns. But that same announcement would prevent the government from continuing to steal, and so, between these two, the preservation of necessary capital and the government leisure, the later is always chosen.

Therefore, any “plan” to recovery that leaves the government un-hung cannot be anything but the Rube Goldberg scheme.

Mario,
I agree that the collapse would not be a walk in the park.
Why should it? Somehow the century of theft must be paid for. It would be immoral to desire no punishment.

nonplused,
Yep. You’re right. Just look at perfectly align statements coming out of europe. Positive, negative, positive, negative. Ha-ha.

Someone tell me that the europe central bankers aren’t trying to pay for some bailouts by feeding the market volatility with the news they can perfectly control. The plan is to suck the portion of world’s wealth to europe, by betting on markets swayed by their own lying statements.

mava November 14, 2011 at 7:05 pm

roger erickson,

The last two quotes are actually from FDR, the great thief, liar and enemy of America. There can be no moral found inside someone that rotten.

Disgusted.

redwilldanaher November 14, 2011 at 7:31 pm

“The last two quotes are actually from FDR, the great thief, liar and enemy of America. There can be no moral found inside someone that rotten.” – Although he ranks highly, he is only one of many, but rotten he was…

Steve November 14, 2011 at 10:31 pm

Yep F.D.R. first said he would put 19, an extra 10, justices on the court, and then pushed forward the Trading with the Enemy Act, and the Emergency Banking Acts that still govern under the abuses of the commander in chief. F.D.R. stands near the top, supported by the rest.

Robert November 14, 2011 at 9:24 pm

And today President Sock-Puppet (aka Teleprompter in Chief- thank you Zerohedge) says China needs to “act like a grown up and play by the same rules as everyone else”…

China quickly (and rightfully) rebukes “We had no seat at the table when those ‘rules’ were written, so why should we abide?”

If I were scoring this as a high school debate, then it is China – 1, USA – zero

Then Zerohedge come in with the evidence that the US is a bigger currency manipulator than China:

http://www.zerohedge.com/news/will-china-label-usa-currency-manipulator

This US-China brinksmanship is getting ready to turn ugly, and for NO GOOD REASON.

Without question, the US holds the military advantage today in all tactical areas but sheer manpower. In other words, there is no viable reason for military engagement because there is no probability of any outcome other than stalemate.

I give the Chinese one personal advantage of righteousness… They understand Yin-Yang, the nature of cycles, and the need for the promotion of fairness (in spite of the overwhelming greed that has corrupted the very fabric of their own governmental and political system as well, something that seems to pervade East and West equally)

The US is poking an awful lot of hornet’s nests lately (Iran, China, Europe).

One needs to ask themselves why before they mindlessly break into the chants of “USA!, USA!, USA!”.

Steve November 14, 2011 at 10:34 pm

Easy, easy – Bammer needs an emergency to keep The Emergency Banking Act and the Trading with the Enemy Act active to enforce against the american children. No bammer in succession needs to explain the emergency, only declare the emergency.

mario cavolo November 16, 2011 at 1:17 pm

The U.S. will push their blustering and whining and threatening as far as they can regarding China; the political and media landscape requires they do. But when push comes to shove, they will back off… no matter the BS politics and MSM, this is more than obvious to any intelligent, fairly objective observer. Furthermore, the idea of any type of actual military conflict between the U.S. and China is, um oh er well, I can’t believe anyone would waste their time writing a sentence on the subject…way way down the list of things to be concerned about…

Cheers, Mario

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