Europe Buys Time with the Vaguest Plan Yet

So lame is Europe’s latest attempt at spin control that Americans could view it as comic relief from our own worries about the U.S. economy’s accelerating death spiral. Creating a global diversion was doubtless a goal of the exercise, which featured Sarkozy and Merkel, president and chancellor, respectively, of France and Germany, posing for the photo-op unveiling of a scheme – sorry, no details at this time –  to put Greece and the rest of the PIIGS on sound financial footing. Never mind that France itself starts to look like a financial basket case if one scrutinizes their books too closely; or that the German people, if not yet their leaders, have lost their appetite for bailing out the rest of Europe. And never mind either that, rather than describing their supposed plan, Merkel and Sarkozy have merely promised to tell us more about it in the fullness of time – reportedly at a November meeting of Euroland’s potentates, wizards and feather merchants. To their dubious credit, and perhaps owing to an understandable desire to avoid the derision of the world, the two leaders did not refer to a “secret plan” when they deliberately left it under wraps; no, they alluded merely to “a plan, ” and we can only surmise that they were fearful of raising the public’s expectations by implying that something new or unexpected was about to be tried. Better instead to maintain and nurture the low-grade cynicism with which most of us have come to regard these announcements.  That cynicism seems manageable, at least – presumably until market forces cause the whole shoddy edifice to crumble.

In the meantime, Sarkozy and Merkel have bought perhaps a month’s time for the hopeless illusion that political Europe will remain united under a single currency.  Sustaining the endgame for yet a while longer was no small feat, considering that, these days, when pit traders around the world hang up their smocks on a Friday afternoon, it is with the fear that Monday will bring news of some epic financial disaster involving a Greek default, or perhaps even bigger problems at some huge, daisy-chained bank elsewhere on the Continent. The disaster we’ve all been expecting could happen at any time, really, but the banksters and politicians have wisely calculated that a run on The System can be postponed more or less indefinitely as long as supposed remedies publicized at carefully timed intervals are left intentionally vague. The Merkel-Sarkozy press conference was the vaguest such media event so far, a dog-and-pony show that lacked both a dog and a pony. It was brazen of them to assume that merely talking the talk would gain another months’ reprieve for Europe; however, with stock markets strongly on the rise since, it looks like they’ll accomplish their goal.

Rube Goldberg to the Rescue!

Not that any of us expects much more than a financial Rube Goldberg contraption, if even that, come November.  Indeed, no one could possibly believe at this point that the Merkel-Sarkozy plan will have any more effect on the unfolding cataclysm than all of the other schemes that have been tried so far. Still, the mainstream narrative that a political solution can restore Europe’s financial integrity will continue to obtain, thanks in large part to the news media’s faithful and unquestioning  complicity in spinning the story.  While we should all like to believe that it is habitual laziness and ignorance that have prevented the Fourth Estate from being more forthcoming about the true condition of the global financial system, it is in fact wide-eyed, scalp-crawling fear that has caused news editors and op-ed writers to shrink from the truth.  They are in it too deep by now to forsake the pretense that the central banks, working in concert with our benighted political leaders, will somehow stabilize the financial system.

Nor are they likely to accomplish anything of lasting value with the latest proposed superfund, which, at two trillion euros, would dwarf the $600 billion-euro figure currently on ostentatious display. These outlandish numbers are meant to challenge the subversive designs of speculators who would bet against Europe, the euro and, most immediately, Spain and Italy. Instead, they merely encourage cynicism, which is summed up succinctly in the question,  “…and where, exactly, would those two trillion euros be coming from?”  Do the spinmeisters who pull these numbers out of thin air actually believe we are so stupid as to believe the money is real?

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  • gary leibowitz October 19, 2011, 3:35 am

    The timely rumor that a deal was settled came at a technically perfect close. A mini-breakout above 1120 made it appear that there were clear skies ahead. I fortunately sold my calls near the top. Now expect SPX of 1257 to fall short. In fact time wise this should have been the top today. We should muddle along for 2 days before a flash crash starting this Friday.

    There really isn’t any “plan” that is viable. A nice notion but deflation forces will win out and even the strong third world countries will not escape it. Even when the details of the plan come out it would not have any long lasting impact on the market.

    Some are calling this the next leg of the rally that can last into next year. I don’t buy into that. On a short term basis the SPX has to reach 1250 or so and stay there for 3 consecutive days.

    I still see Gold as an illiquid commodity and any stock disruption will make it fall hard. I will probably make my 8th option bet in the next two days, as long as the crash scenario looks good. I am 7 for 7 and my bets were not exactly easy safe ones. This is my biggest streak in decades.

    Sorry if I sound arrogant but it’s been a while since I got back in the zone.

  • ProfitsOn October 18, 2011, 6:06 pm

    Unfortunately,

    Greece might default within few months.

    Financial markets could see new lows, before different trends will set in.

    Good post!

  • Larry D October 17, 2011, 11:01 pm

    Rick –
    your photo needs a Bee Gees tune to tag along.

  • Robert October 17, 2011, 9:25 pm

    Fantastic commentary today, Rick-

    I’ve nothing to add, except that the Revolution in America worked because it was the people clamoring for new government…

    In Europe, it is the Government clamoring for new government (aka fiscal Union), while the people (notably Greece) are simply clamoring for status quo (ie: we don’t want to pay taxes, and we do still expect 60 days of paid vacation per year)…

    Fascinating.

  • John Jay October 17, 2011, 8:50 pm

    ful_karboy,
    “Then logically they’d want to avoid mobs with pitchforks etc. and not kill the “golden goose”. Why destroy the system you’re milking and live in a bunker? Any power vaccum and some dictator will soon fill it. Marxist? Islamic?”

    The mobs so far are a lot less numerous, threatening, and vocal than the anti-Vietnam war mobs of the 1960s. Those mobs were ignored by the government, the war went on.
    They have gotten away with it for so long, they no longer fear punishment, they dictate terms to the government.
    In NYC they hire the NYPD for security, right out in the open. They are not destroying the system they live in, and they don’t live in bunkers. They never see a mob. They have Gulfstream jets, ocean going yachts, estates in Greenwich, vacations in Europe, dynasty family trusts, and low or no taxes. What they have destroyed is the system you and I live in, they don’t care about that of course. If it all goes down, there will be a power vacuum.
    But for now, they are king. No one kidnaps them or their family members for ransom. No one is burning down their estates or taking pot shots at them as they are playing tennis. If the dollar collapses, they will engineer that collapse, and game it. It just means their wealth will be valued in the new currency, they will still own everything. But they are not going to give up anything out of fear of the mob. The average American still is distracted by the the political process that gives them the illusion that they control things. The Czar lost everything when WWI pushed Russia over the cliff. The English royal family did not, they have a better handle on public relations. Who knows if our new royality can hang on to their wealth.

  • Seawolf October 17, 2011, 7:44 pm

    The Fed is a Corporation

    The Supreme Court has spent many sessions defining corporations as persons

    Someone made the statement “I will believe that corporations are persons when Texas executes one”

    Ron Paul is from Texas

    Do you suppose something could be worked out?

  • dan October 17, 2011, 7:30 pm

    end the fed..put sound money back to the US Treasury..and let the whole 600 trillion derivative BS crash taking all with it…from the ashes then we can rebuild without the thieves

  • Seawolf October 17, 2011, 6:08 pm

    I expect The Bernank will be more than willing to buy whatever they decide to call the plan that they are selling. He is running the printing presses anyway, so might as well run off a few more trillion.

  • nonplused October 17, 2011, 5:43 pm

    This was a very good essay.

    It is surprising that the MSM and their followers can continue to dream the dream that the system can be saved. The financial system, especially the government finance side of it, is a Ponzi scheme, and we’ve run out of Ponzis. It must therefore collapse. Everyone who spends some time with reality comes to the conclusion that government debt never has historically and likely never will in the future be paid back. It can’t be. Otherwise, why did they have to borrow in the first place?

    Not to get into the debate again, but the printing press is the only way out. It remains to be seen whether the printer can run fast enough to keep up with the bankruptcy courts.

  • mava October 17, 2011, 4:41 pm

    But, this “big secret solution to be revealed” will wear off very fast, once they “reveal” bullsh*t a couple of times. So, then what? They must understand this. This is why I think they are buying time, while building something entirely different.

    If I were them, I would be looking for those in the same boat, meaning reminding US, that there is nothing different about their situation, at least qualitatively. So, I guess they are working on some new scam, that would probably require not only Europe, but the participation of the US, as well.

    They must understand too, that they can paper over any losses, and that thy can bailout any size of bank, any number of banks, but that the problem will be either the economy not taking a bite on a new round of scam game (because, debts are too high, irregardless of how low the interest is), or that the Euro and USD will face rejection from the people, as authorities start to bail out yet lower levels of the pyramid.
    So, they are probably discussing a two prong approach: on one hand, they have to bail out those not taking new debts. On another, they need to bring about new, similarly fake currency unit “people can believe in”.

    These two can actually match very well, given right conditions and ratios of exchange to new currency. Those with loans out, will get better ratios of exchange if they reform loans already issued, as they would be the ones needing and seeking better exchange ratios.

    What else? Can we really believe these “authorities” are really so dumb, as to simply play their “dog and pony show” without either a dog or a pony in it, and expect it to end well? Even if they only hope to end their terms in office, the way this disaster can unfold may mean they’d be having no power, while newcomers are blaming everything on them.

  • mava October 17, 2011, 3:53 pm

    RichardB:
    Spilled my coffee reading the comment:
    ” The Merkel-Sarkozy press conference was the vaguest such media event so far, a dog-and-pony show that lacked both a dog and a pony. ”
    Please use caution when reading Rick’s comments!

    Yep, same here. My second favorite were “the feather merchants”.

  • fallingman October 17, 2011, 3:29 pm

    Indeed. The writing is always as good as the analysis.

  • RichardB October 17, 2011, 3:18 pm

    Spilled my coffee reading the comment:

    ” The Merkel-Sarkozy press conference was the vaguest such media event so far, a dog-and-pony show that lacked both a dog and a pony. ”

    Please use caution when reading Rick’s comments!

  • Buster October 17, 2011, 2:30 pm

    Though the financial part of the Elites pyramid is presently getting uncovered for all the world to see, it isn’t the whole of their mafioso operation. There are three main parts to this centuries old clandestine organisation. The industrial/military complex is the second, with just as many crimes against humanity piled up as the financial section has. Thirdly is the religious part, though not as dominating as it once was but still useful as a controlling weapon to enslave the minds of the masses. It has to a large degree been superseded by the mainstream media.
    Ultimately, these three institutions have been the tools of the trade of the Elites to control & enslave human society for centuries. Their crimes are horrendous!
    There is quite firm evidence that the Elites have had a very organised & purposeful plan all along,- nothing less than world domination & destruction of their enemy- the general population. There are a couple of good documentaries on this subject.
    “The Money Masters” is excellent & describes the history of the financial side of their sting operation.
    Also, though I would disagree on some important points in it, the “Empire of The City-Ring of Power” is still a good explanation of even more of the history and grand scheme of the Elites, as portrayed by one of the insiders own daughters.
    Both of these documentaries are available freely online via Youtube, and I highly recommend them to anyone trying to get an understanding of where we are in the grand scheme of things.

    To sum up recent world events, we are witnessing the revealing of a centuries old secret organisation that has controlled many governments & peoples through gaining the control of the countries money supply, initially. The political & corporate structures soon follow the money, as do the people. The religious/media control is simply to keep the minds of the populous in check, believing the right ‘spin’ of the time. The political map of the world has been written by this group of criminals, & all manner of wars ‘waged’ at their behest.
    Presently we see the result of this revealing, in that the enslaved & blinded peoples are awakening to see their chains. It is an ongoing process, and one which shouldn’t be underestimated. This ‘awakening’ will in time result in the withdrawal of support for the ‘whore’, as the ‘rivers’ or peoples she has sat on are dried up. What follows that is even more inspiring for all of us who have suffered at her influence…..but I’ll leave that for another day.

  • Rich October 17, 2011, 2:15 pm

    For what it’s worth, Big4 are short the Dow now…

    • Rick Ackerman October 17, 2011, 8:54 pm

      Nicely timed, I’d say — especially considering yours truly began the new week complacent that my next bullish target would be reached more or less routinely. My savvy friend Doug at UBS thinks the serious selloff we’ve all been expecting has in fact begun today, and that the momentous Merkel-Sarkozy announcement in early November will not hold the furies in abeyance. His bearish take is based on Bob Farrell’s rule about what happens when all of the experts get on the same side of the trade. In this case, he said that “everyone” is focused on the same, bullish target at 1256 that I was using for the E-Mini S&Ps. It is still valid in theory, but today’s selloff has rendered the pattern itself much less compelling.

    • Rich October 18, 2011, 5:22 pm

      Thanks Rick. Curiously, LT Big4 long NDX, RUT and SPX here, for a mixed green salad.

      Speaking of BF’s Rule, there’s a lot of bearish sentiment out there even after we rallied, and love to fade sentiment…

    • Rich October 18, 2011, 6:08 pm

      SPX PnF target = 1510…

  • John Jay October 17, 2011, 5:41 am

    The only difference between Europe and the USA is in some minor details. The agenda of the elite in both areas is the same. Their plan is to hang on to all their wealth and power, no matter what the consequences may be for the 99.9% not in the club. After Charles Keating and about a thousand other bankers went to jail back in the 80s, they knew that in order to pull off the biggest con of all, and walk away with the cash, they had to get their ducks in a row. So, first, they bought complete control of Congress. Secondly, they got Depression era regulations repealed. Then, get the 250k/500k tax free accelerent in place. Last, give the Federal Reserve their marching orders. Loose money at low rates, and “there is no Real Estate bubble” as a mantra. It was more complex than that, but that sums it up. When it all crashed, their buddies in Congress ignored their constituents, and coughed up TARP etc. Oh, and no prosecutions like the last time, that was also arranged.
    All those bad, leveraged loans are still out there, however. It is a guessing game as to which Ponzi scheme implodes last, ours, Japans, or Europes. I hope it is ours. A forlorn hope is better then no hope at all!

    • redwilldanaher October 17, 2011, 12:21 pm

      And yet the “commentators” will feign astonishment when the next dozen or so Guy Fawkes arrive on the scene…

    • fallingman October 17, 2011, 3:30 pm

      Hard to argue with.

    • ful_karboy October 17, 2011, 7:58 pm

      “The agenda of the elite…. is to hang on to all their wealth and power, no matter what the consequences may be for the 99.9% not in the club. ”

      Then logically they’d want to avoid mobs with pitchforks etc. and not kill the “golden goose”. Why destroy the system you’re milking and live in a bunker? Any power vaccum and some dictator will soon fill it. Marxist? Islamic?

      The “free lunch” votes have pushed the US and Euroland to the brink of collapse. A Ponzi scam only lasts as long as there’s more and more new entrants. Population growth is slowing, millions of potential “worker bees” have been aborted and a wide spectrum of anti-business practices have kept the “pie” from growing or is “Atlas” finally “Shrugging”?

      Maggie Thatcher said that socialism works fine until you run out of other people’s money, printing more won’t buy much time!

    • DanX October 19, 2011, 9:29 am

      “Oh my God! Who could have known…..!!!”
      Man I’m tired of hearing that from politicos and the MSM.