German Court Case Could Force Euro Exit

[Guest TheBlueCat]

I enjoy AEP's writing because it's so spectacularly excitable. The problem is that, as far as I can recall, he's never actually been right about anything that mattered. He could in fact be said to have negative alpha. Here's his latest:

http://www.telegraph.co.uk/finance/financialcrisis/10108010/German-court-case-could-force-euro-exit-warns-key-judge.html

I mean, really?

[copydude]

I enjoy AEP's writing because it's so spectacularly excitable. The problem is that, as far as I can recall, he's never actually been right about anything that mattered. He could in fact be said to have negative alpha. Here's his latest:

http://www.telegraph.co.uk/finance/financialcrisis/10108010/German-court-case-could-force-euro-exit-warns-key-judge.html

I mean, really?

I think this is more a fair analysis than an opinion piece.

The Euro crisis has been 'put on hold' in various ways until the German elections. (FinMins praising reforms and talking up ever-worsening figures into fantasy recovery, for example.) But there is plenty of evidence that Germany is backing off from its role as unlimited guarantor and the hardliners (Wiedmann, Schauble) have always been adamant that there will be no wealth transfer - the only thing that can ultimately save the Euro.

FWIW, Bloomberg ran a piece in May which generally agrees with AEP . . . link

Most analysts believe the court will rule in favor of the ECB program, at least in a modified form. Even if that proves to be the case, however, the court hearings could easily develop a circus-like atmosphere that creates uncertainty and undermines confidence in the common currency. The hearings might also affect September’s federal elections in Germany, given that Merkel supported the ECB’s program from the outset.

And all this risk for what? So that the anti-euro lawyers and officials in top management at the Bundesbank can take their revenge on a currency union that they opposed from the very beginning. Germany’s central bank clearly went too far this time.

But Bloomberg's is an opinion piece too, because it believes OMT is a success story. The Bundesbank believes it is a short fuse.

[Stop The Ride]

I enjoy AEP's writing because it's so spectacularly excitable. The problem is that, as far as I can recall, he's never actually been right about anything that mattered. He could in fact be said to have negative alpha. Here's his latest:

http://www.telegraph.co.uk/finance/financialcrisis/10108010/German-court-case-could-force-euro-exit-warns-key-judge.html

I mean, really?

He is magnificent, isn't he? He's wrong about this one, I'd say.

Edit: I'm pretty sure AEP was broadly correct about the terrible mess the EU and IMF would make in Greece, Spain etc. as opposed to an early massive default and Euro exit. Or perhaps I imagined that.

Edited June 10, 2013 by Stop The Ride

[Nationalist]

I think AEP must have been in continuous orgasm since 2007 - he was predicting the demise of the Eurozone so vociferously for so long.

[interestrateripoff]

Hard to see the German courts collapsing the Euro irrespective of how right the challenge is.

[zugzwang]

The eurozone was never a threat. Unlike the central bank wreckers Bernanke, Abe, Carney and King who have been allowed to blow up the world all over again.

[kagiso]

I enjoy AEP's writing because it's so spectacularly excitable. The problem is that, as far as I can recall, he's never actually been right about anything that mattered. He could in fact be said to have negative alpha. Here's his latest:

http://www.telegraph.co.uk/finance/financialcrisis/10108010/German-court-case-could-force-euro-exit-warns-key-judge.html

I mean, really?

Really?!

I can only presume you have never actually read any AEP.

Try reading the link below all the way through.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6630117/Greece-tests-the-limit-of-sovereign-debt-as-it-grinds-towards-slump.html

It is AEP's prediction of a Greek default in Nov 2009. At the time a lot of commentators such as you treated him like a swivel eyed loon.

There is not a word of it that is wrong. He predicted the whole sovereign debt crisis way before any other mainstream pundit. And also prompted me to start the soveriegn default watch thread:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=131198

Because his central premise is correct. Like the gold standard in the twenties, the euro is not sustainable because the euro area is not an optimal currency zone. Southern Europe will continue to slump until the euro is split up. And southern europe is now extending to include France and even Holland.

The split is inevitable, because either 1. the South will get fed up with pemanent depression, or 2. the Germans will get fed up with paying bigger and bigger bills.

The article you quote is simply discussing whether option 2. is about to break.

Maybe it is, maybe it isn't. But one option is definitely going to happen. France moving into full slump will be the critical point.

AEP has been consistenly and spectacularly right for the last four years.

[LiveAndLetBuy]

I enjoy AEP's writing because it's so spectacularly excitable. The problem is that, as far as I can recall, he's never actually been right about anything that mattered. He could in fact be said to have negative alpha. Here's his latest:

http://www.telegraph.co.uk/finance/financialcrisis/10108010/German-court-case-could-force-euro-exit-warns-key-judge.html

I mean, really?

He was right about practically all the economic faults in the euro, and some of the consequences (no lender of last resort = bond market runs, one size fits all interest rates = debt crises, etc)

But while he is good at describing and predicting certain economic situations, he is hopeless at predicting what will be done about them, since that depends on politics and how far politicians will go to protect themselves. So when AEP writes this type of article I tend to switch off. He might turn out to be right this time, but if so it would be a case of being a stopped clock

[Goat]

....But while he is good at describing and predicting certain economic situations, he is hopeless at predicting what will be done about them, since that depends on politics and how far politicians will go to protect themselves....

I'm not sure that's fair. From what I've seen he understands that they'll kick the can down the road for as long as possible but in the end break up is (almost) inevitable, quite how and when that happens is of course impossible to say.

[easy2012]

I think AEP must have been in continuous orgasm since 2007 - he was predicting the demise of the Eurozone so vociferously for so long.

I have yet to see a society that stands by its principles when facing a disastrous situation... Eurozone is unlikely to be an exception - ECB has certainly went from "no print" to OMT and Germany shall continue to remain flexible and the plight of a few German peasants (facing inflation) are not going to stand in the way of Germany's overall export success.

Edited June 10, 2013 by easy2012