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Euro Is Not Under Attack, Ecb's Trichet Says


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People seem to completely misunderstand the concept of financial markets.

Markets are just people, organisations and countries with money to lend

If these people do not want to invest in the Eurozone this is entirely up to them

It's not some sort of Global conspiracy, the run on the Euro was started by one of the Euro Zone member governments lying about its debt

How the hell can the market have confidence in a currency when the information on which this confidence is based is shown to be fabricated

If a tramp knocked on your door and said 'Lend me a hundred quid and I'll come back next week and give you two hundred quid back' would you lend him the money?

Of course not.

Why the hell should anyone lend money to someone if they stand a good chance of losing that money?

:blink:

+1000.

There is no conspiracy. Just markets. And ( pardon my French Sarkozy ) dumbass statist elitist EU leaders who think they can dictate to the markets....

Throwing a trillion dollars into the pot for the defence of the Euro is like pouring petrol on a raging fire...

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I rather suspect they're betting the French and German banks are insolvent.

That is the reality that dare not speak it's name. Nobody gives a toss about Greece per se.

Creditors must always be part of the solution. They have to take the hit. The only real question I think is when and in what form this will be implemented.

I agree, but creditors won't be a part of the solution. By using credit default swaps, the creditors now have the perverse incentive to push Greece to destruction. That is the crux of the problem.

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+1000.

There is no conspiracy. Just markets. And ( pardon my French Sarkozy ) dumbass statist elitist EU leaders who think they can dictate to the markets....

Throwing a trillion dollars into the pot for the defence of the Euro is like pouring petrol on a raging fire...

Nobody is doubting the mess that Greece is in, nobody could really doubt the mess it has been in for ages, without what we have seen recently happening.

I have no doubt that now most markets have moved beyond any semblance of normality. These markets are being pushed / skewed / manipulated or otherwise gamed for the benefit largely of those pushing their weight around either in volume or frequncy of the trades they make well beyond any normal influence. They have a stranglehold and are using that toegther with other instruments to play much larger games.

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Nobody is doubting the mess that Greece is in, nobody could really doubt the mess it has been in for ages, without what we have seen recently happening.

I have no doubt that now most markets have moved beyond any semblance of normality. These markets are being pushed / skewed / manipulated or otherwise gamed for the benefit largely of those pushing their weight around either in volume or frequncy of the trades they make well beyond any normal influence. They have a stranglehold and are using that toegther with other instruments to play much larger games.

...but when the cracks are papered over ...is there not a game on....?....or should they be going for the US ...California is/was in the worlds top ten economies ...and it's not pretty right now ....there are many States in the queue behind ....just not healthy ...do the big game players ignore this and feel there is a secret saviour somewhere ..?.... :rolleyes:

Edited by South Lorne
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Sure after Goldman Sachs has been 'advising' corrupt Greek politicians for years on how to take on as much debt as possible, it's all to easy for the same Goldman Sachs to now profit from it again by speculating against Greece and the Euro.

If this is not clear evidence of it being planned then I don't know what is.

It's clear fraud, GS helped the Greeks hide massive debt to acquire more debt from the markets with all concerned knowing there was no possible way the Greeks could ever pay the money back. GS knew this and will now be actively betting against the Euro and Greeks knowing how big the blackhole is. This is insider dealing at it's finest.

With previous Greek history there is no way anyone should have considered lending them money.

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Nobody is doubting the mess that Greece is in, nobody could really doubt the mess it has been in for ages, without what we have seen recently happening.

I have no doubt that now most markets have moved beyond any semblance of normality. These markets are being pushed / skewed / manipulated or otherwise gamed for the benefit largely of those pushing their weight around either in volume or frequncy of the trades they make well beyond any normal influence. They have a stranglehold and are using that toegther with other instruments to play much larger games.

But the markets represent underlying psychology.

I was trying to explain this to my wife yesterday....as I see it, if the British pound and the British economy were to come under pressure, and it will, there is a shared culture, history and belief in the currency, that ultimately means survival. There is also now a shared political platform that strongly connects with the electorate.

But in Europe, the people have been completely left out of the consentual process; they have had no say as to whether they wanted the Euro in the first place, and the only platform available to them is one of pain and suffering. There is no consensus nor is there a deep commitment amongst the rank and file European regarding the Euro.

The only true consensus that exists in Europe is that of the blood-sucking EU bureaucrat in Strasbourg and Brussels; reminiscent of the situation in the Soviet Union just before it collapsed.

Accordingly the rank and file Europeans, as part of the market themselves, are effectively amongst the most active 'shorts'; buying gold, dollars or other alternatives, shedding their Euros faster that fleas...

Agreed, the large speculative players will use their power to try to influence timing, but the ultimate result will be determined by the markets; the psychology of the people.

But the top-down statist elite EU bureaucracy still doesn't get it...and the rank and file European knows this...

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+1000.

There is no conspiracy. Just markets. And ( pardon my French Sarkozy ) dumbass statist elitist EU leaders who think they can dictate to the markets....

Throwing a trillion dollars into the pot for the defence of the Euro is like pouring petrol on a raging fire...

QED.

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http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7730964/Forget-the-wolf-pack-the-ongoing-euro-crisis-was-caused-by-EMU.html

Jean-Claude Trichet tells us the world faced a second Lehman crash in the days and hours before EU leaders launched their €720bn (£612bn) defence fund. If the European Central Bank’s president is correct, we are in trouble. The EU-IMF package is already unravelling. What will the West do for its next trick?

Mr Trichet was ash-white at the Brussels summit a week ago. He distributed charts of credit stress to every eurozone leader. By the time he had finished his hair-raising discourse, everybody round the table finally understood what they faced.

“The markets had ceased to function,” he told Der Spiegel. “There is still a risk of contagion. It can happen extremely fast, sometimes within hours.”

The spreads on Greek, Iberian, and Irish bonds have, of course, dropped since the ECB stepped in with direct purchases. But the euro rally fizzled fast, to be followed by a fresh plunge to a 18-month low of $1.24 against the dollar. European bank stocks have buckled again. Spain’s IBEX index fell 6.6pc in capitulation fever on Friday.

Geneva professor Charles Wyplosz said EU leaders made the error of overselling up their “shock and awe” package before establishing any political mechanism to mobilise such sums. “The fund is an empty shell,” he wrote at Vox EU. “Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements.”

Brussels was unwise to talk of smashing the “wolf pack” speculators and defeat the “worldwide organised attack” on the eurozone. As Napoleon said, if you set out to take Vienna, take Vienna. Besides, the language of the EU priesthood – ex-ECB board member Tomasso Padoa-Schioppa talks of the advancing battalions of the “anti-euro army” – frightens Chinese and Mid-East investors needed to soak up EU debt. These metaphors are a mental flight from the issue at hand, which is that vast imbalances – masked by EMU, indeed made possible only by EMU – have been decorked by the Greek crisis and now pose a danger to the entire world.

One can only guess what Mr Trichet meant when he said we are living through “the most difficult situation since the Second World War, and perhaps the First”. Is this worse than Credit Anstalt in the summer of 1931, the event that brought down central Europe’s banking system and tipped Europe into depression?

Or was Mr Trichet alluding to something else after witnessing the Brussels tantrum by President Nicolas Sarkozy? According to El Pais, Mr Sarkozy threatened to pull France out of the euro and break the Franco-German axis at the heart of the EU project unless Germany capitulated. To utter such threats is to bring them about. You cannot treat Germany in that fashion.

Chancellor Angela Merkel has put the best face on a deal that has so damaged her leadership. “If the euro fails, then Europe fails and the idea of European unity fails,” she said. Too late, I think. The German nation is moving on. I was struck by a piece in the Frankfurter Allgemeine proposing a new “hard currency” made up of Germany, Austria, Benelux, Finland, the Czech Republic, and Poland, but without France. The piece entitled The Alternative says deflation policies may push Greece to the brink of “civil war” and concludes that Europe would better off if it abandoned the attempt to hold together two incompatible halves. “It can be done,” the piece says.

What makes this crisis so dangerous is not just that Europe’s banks are still reeling, with wafer-thin capital ratios. The new twist is that markets are no longer sure whether sovereign states are strong enough to shoulder rescue costs. The IMF warned in last week’s Fiscal Monitor that the tail risk of a “widespread loss of confidence in fiscal solvency” could no longer be ignored. By 2015 public debt will be 250pc in Japan, 125pc in Italy, 110pc in the US, 95pc in France, and 91pc in the UK.

There is a way out of this crisis, but it is not the policy of wage deflation imposed on Ireland, Greece, Portugal, and Spain, with Italy now also mulling an austerity package. This can only lead to a debt-deflation spiral. The IMF admits that Greece’s public debt will rise to 150pc of GDP even after its squeeze, and that Spain’s budget deficit will still be 7.7pc of GDP in 2015.

The only viable policies – short of breaking up EMU or imposing capital controls – is to offset fiscal cuts with monetary stimulus for as long it takes. Will it happen, given the conflicting ideologies of Germany and Club Med? Probably not. The ECB denies that it is engaged in Fed-style quantitative easing, vowing to sterilise its bond purchases “euro for euro”. If they mean it, they must doom southern Europe to depression. No democracy will immolate itself on the altar of monetary union for long.

Once more AEP wants more printy printy.

Hyperinflation is not a way out of this mess. It didn't work in Zimbabwe and it won't work here.

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