Euro on ???Death Watch??? After Investors Spurn German Bonds

[Big Pimpin]

Investors began to fear the worst for the euro after unusually weak demand at an auction for bonds from Germany, the region???s largest economy. One analyst went so far as to put the currency on a ???death watch.???

AP​

Germany sold just 60 percent of the 6 billion euros in 10-year bunds it brought to auction, about the weakest demand seen for the country???s debt in the currency???s 16-year history, economists said. The rejection of debt from Europe???s safe harbor marks a new stage for the crisis.

???No bunds wanted equals no Euros wanted equals the Euro death watch,??? wrote Mark Steele, an analyst with BMO Capital Markets. ???We have seen many poor German auctions. This is not the issue. The issue is how badly the euro is doing after the weak auction.???

The euro [EUR=X 1.3329 [IMG]http://media.cnbc.com/i/CNBC/CNBC_Images/componentbacks/watchlist_down.gif[/IMG] -0.018 (-1.33%) ] fell more than 1 percent against the dollar to a 7-week low against the Greenback. The currency threatened to break through the October lows that came amid the height of turmoil in Italy and Greece. Both countries would go on to install new Technocrat leaders, lifting confidence in the currency briefly.

The European Financial Stability Facility does not give the European Central Bank the same firepower or freedom of the Federal Reserve, which it utilized in the aftermath of the U.S. credit crisis with two rounds of massive purchases of Treasurys (QE) . Germany has been reluctant to follow the Fed???s lead and buy up other countries bad debt because of fear over inflation.
German Chancellor ???Merkel has been opposed to using the ECB as a monetizer of debt,??? said Dennis Gartman of The Gartman Letter. ???Germany doesn???t even like to think in these terms, but they may not have a choice.???

Recent reports have hinted at different workarounds of the euro treaty being discussed to effectively replicate quantitative easing in Europe. One option discussed was for the ECB to lend money to the IMF, which in turn would buy the toxic debt before it could spread to yet another country.
???It???s too late for a bazooka,??? said Mitchell Goldberg, president of ClientFirst Strategy. ???Now we need inter-continental ballistic missiles. This is getting worse very quickly.???

Investors had kept buying German bonds as they fled crisis after crisis in the region: first in Ireland, then in Greece and Italy, and now in Spain and Belgium. But Wednesday, 10-year bunds dropped significantly after the failed auction, pushing the yields above 2.05 percent, but perhaps more importantly above the U.S. treasury with the same maturity for the first time since early October.

???We are seeing the end of the euro currency as we know it,??? said Brian Stutland of Stutland Volatility Group. ???I don't see a single thing that causes the euro to rally other than the Fed announcing a ???QE3??? in which they buy euro foreign debt.???

 

[Big Pimpin]

As explained in the Fake Economy article, most Western countries around the world have been over-borrowing and over-spending since the mid-1960's, spending mostly on socialist programs, to create fake wealth and fuel fake economies. The U.S. and Canada have been doing this since the mid 1960's. Europe is not much different. The result is ever increasing debts.

However, the generation that borrowed and spent, will not be paying back the debt. It will be the next generation. Effectively, we are stealing money from children.

When the American fake economy came down in 2008-2009, they stole even more from children to support it. They did this through dozens of programs that drove up their deficit and debt. Some of these programs are:

• Stimulus
• TARP (Toxic Asset Repurchase Program)
• Cash for Caulkers (for a list of housing programs, read Housing, the most manipulated market in the world)
• Cash for Clunkers
• Extension of Bush tax cuts
• Etc.

With super-sized debts, Europeans are now hitting a limit on getting more suckers to lend money. Therefore, they have to slow down or reduce their borrowing and spending. This is causing their economies to come back down, closer to a level where they are living within their means and where they enjoy a standard of living that they earned and deserve. Even though the economies are coming down, their economies are still fake because they still have huge debts.

The slowing European economies are causing deficits to persist, which continue ballooning their debts. Now, the lenders are fearful that these governments will not repay the debt. Many of the lenders are banks.

In a normal functioning free-market capitalist society, when a business is incompetent and makes bad decisions, the business should suffer the consequences. If a business is a failure, it should declare bankruptcy and go away. The banks made bad decisions by lending money to high-risk borrowers. Incompetent banks should declare bankruptcy and go away.

Let us say that I have a relative who makes $30K/year and he borrowed a million dollars to buy a big house and a fancy car. If I lent more money to him and I lose that money, should you bail me out or should I suffer the consequences? If I was a banker, I would be considered incompetent. I should be fired.

However, we have not had normal functioning, free-market capitalism for many decades. Europe is especially socialistic, that believes in saving everybody. The suffering is passed to others, mainly to their children.

The banks are a special case as well, since they are the hub of the economy and provide credit. Businesses need credit to operate and the economy cannot expand without credit. However, we've had a credit bubble since the early 1980's. Nevertheless, politicians don't want the credit to shrink because the fake economies will shrink. If the economies shrink, unemployment will go up and therefore, politicians may have no choice but to maintain the bubble credit levels.

What will the European politicians do? They will steal even more from children to support their economies. How? By setting up their EFSF (European Financial Stability Facility) and its replacement, the ESM (European Stability Mechanism). The EFSF will borrow ???440 billion (by selling bonds) and then give that money to their incompetent banks and incompetent countries who borrowed and spent too much. In fact, there is a push to lever up the EFSF to a whopping ???1.5 to ???2 trillion.

Essentially, this is what is happening:

• Countries borrowed too much from the banks and investors
• Banks and countries need to be bailed out
• Other countries, especially Germany and France who already have large debts, will borrow more to give to the incompetent countries and banks

Can we say "moral hazard" to the extreme? America had "moral hazard" by bailing out car companies, banks and insurance companies. Europe wants to bail out whole countries. Using the personal example from above, what Europe is doing is giving more money to my pathetic relative with the fake wealth who cannot live within his means, and to me, who is incompetent for lending more money to my relative.

So, Europe is trying to solve a debt crisis by going into bigger debt. What got the Europeans into trouble was that they borrowed too much. Now, they want to step up the borrowing another notch.

This may or may not work. Nobody knows yet. However, we do know that these are long term debts which means that their stealing money from children will go into overdrive.

The IMF is funded by the U.S., Canada, Australia and other countries. These countries are already stealing from their own children. There is push for IMF to contribute billions of dollars to the European bailout, which means that Europe can potentially steal from children globally, including your children.

If we had true democracy, where the children got to vote on these policies, will they let these policies pass? When the children become adults and their debt-ridden economy needs to be bailed out, where will they get the money?

Before we agree to give away any more good money after bad, somebody needs to present a clear analysis and explanation, showing the long term, quantified advantages and disadvantages and cost / savings to the different parties, of the following scenarios:

1. Stop giving money to Greece. Let them default or restructure.
   1. Let Greece stay in the Euro Zone. What is the cost of this to the current generation and to which countries?
   2. Let Greece exit the Euro Zone and go back to the Drachma. What is the cost of this to the current generation and to which countries?
   3. Let the other European countries save their banks. What is the cost to the current generation and to which countries?
   4. Let the banks fail. What is the cost to the current generation and to which countries?
2. Continue giving money to Greece and watch them continue to waste it. What is the cost of this to the future generations and to which countries?

Where is this analysis from the EU, Euro Zone, European Commission, ECB or IMF?

NewWorldParty.org: Europe's "Stealing from Children" goes into Overdrive

 

[Thee_One]

No more bail outs.

 

[DOMS]

I don't believe that Germany's bond issue has anything to do directly with Germany.

When the world recession started, Germany was the first country to make sensible cuts. They did everything they needed to do to get themselves back on track.

So what is Germany's issue? The EU.

Countries like Greece and Spain are weighing it down. The EU can cut Greece go if it comes down to it, but if Spain crumbles, it make kill the Euro / EU.

 

[Dark Geared God]

I don't believe that Germany's bond issue has anything to do directly with Germany.

When the world recession started, Germany was the first country to make sensible cuts. They did everything they needed to do to get themselves back on track.

So what is Germany's issue? The EU.

Countries like Greece and Spain are weighing it down. The EU can cut Greece go if it comes down to it, but if Spain crumbles, it make kill the Euro / EU.

now they know greece and the other are dead weight

 

[Ichigo]

They should arrest and imprison all the bankers and politicians, "including the wives or husbands" that are involved in this whole mess and turn them into indentured servants and put them to work in sweatshops. Force the remaining families to live in the projects.

Furthermore take all of their crap they've accumulated over the years and auction them off to pay down the ridiculous debt they all have caused.

By the way this should be done in all countries, including ours!

 

[LAM]

As explained in the Fake Economy article, most Western countries around the world have been over-borrowing and over-spending since the mid-1960's, spending mostly on socialist programs, to create fake wealth and fuel fake economies. The U.S. and Canada have been doing this since the mid 1960's. Europe is not much different. The result is ever increasing debts.

However, the generation that borrowed and spent, will not be paying back the debt. It will be the next generation. Effectively, we are stealing money from children.

When the American fake economy came down in 2008-2009, they stole even more from children to support it. They did this through dozens of programs that drove up their deficit and debt. Some of these programs are:

• Stimulus
• TARP (Toxic Asset Repurchase Program)
• Cash for Caulkers (for a list of housing programs, read Housing, the most manipulated market in the world)
• Cash for Clunkers
• Extension of Bush tax cuts
• Etc.

With super-sized debts, Europeans are now hitting a limit on getting more suckers to lend money. Therefore, they have to slow down or reduce their borrowing and spending. This is causing their economies to come back down, closer to a level where they are living within their means and where they enjoy a standard of living that they earned and deserve. Even though the economies are coming down, their economies are still fake because they still have huge debts.

The slowing European economies are causing deficits to persist, which continue ballooning their debts. Now, the lenders are fearful that these governments will not repay the debt. Many of the lenders are banks.

In a normal functioning free-market capitalist society, when a business is incompetent and makes bad decisions, the business should suffer the consequences. If a business is a failure, it should declare bankruptcy and go away. The banks made bad decisions by lending money to high-risk borrowers. Incompetent banks should declare bankruptcy and go away.

Let us say that I have a relative who makes $30K/year and he borrowed a million dollars to buy a big house and a fancy car. If I lent more money to him and I lose that money, should you bail me out or should I suffer the consequences? If I was a banker, I would be considered incompetent. I should be fired.

However, we have not had normal functioning, free-market capitalism for many decades. Europe is especially socialistic, that believes in saving everybody. The suffering is passed to others, mainly to their children.

The banks are a special case as well, since they are the hub of the economy and provide credit. Businesses need credit to operate and the economy cannot expand without credit. However, we've had a credit bubble since the early 1980's. Nevertheless, politicians don't want the credit to shrink because the fake economies will shrink. If the economies shrink, unemployment will go up and therefore, politicians may have no choice but to maintain the bubble credit levels.

What will the European politicians do? They will steal even more from children to support their economies. How? By setting up their EFSF (European Financial Stability Facility) and its replacement, the ESM (European Stability Mechanism). The EFSF will borrow ???440 billion (by selling bonds) and then give that money to their incompetent banks and incompetent countries who borrowed and spent too much. In fact, there is a push to lever up the EFSF to a whopping ???1.5 to ???2 trillion.

Essentially, this is what is happening:

• Countries borrowed too much from the banks and investors
• Banks and countries need to be bailed out
• Other countries, especially Germany and France who already have large debts, will borrow more to give to the incompetent countries and banks

Can we say "moral hazard" to the extreme? America had "moral hazard" by bailing out car companies, banks and insurance companies. Europe wants to bail out whole countries. Using the personal example from above, what Europe is doing is giving more money to my pathetic relative with the fake wealth who cannot live within his means, and to me, who is incompetent for lending more money to my relative.

So, Europe is trying to solve a debt crisis by going into bigger debt. What got the Europeans into trouble was that they borrowed too much. Now, they want to step up the borrowing another notch.

This may or may not work. Nobody knows yet. However, we do know that these are long term debts which means that their stealing money from children will go into overdrive.

The IMF is funded by the U.S., Canada, Australia and other countries. These countries are already stealing from their own children. There is push for IMF to contribute billions of dollars to the European bailout, which means that Europe can potentially steal from children globally, including your children.

If we had true democracy, where the children got to vote on these policies, will they let these policies pass? When the children become adults and their debt-ridden economy needs to be bailed out, where will they get the money?

Before we agree to give away any more good money after bad, somebody needs to present a clear analysis and explanation, showing the long term, quantified advantages and disadvantages and cost / savings to the different parties, of the following scenarios:

1. Stop giving money to Greece. Let them default or restructure.
   1. Let Greece stay in the Euro Zone. What is the cost of this to the current generation and to which countries?
   2. Let Greece exit the Euro Zone and go back to the Drachma. What is the cost of this to the current generation and to which countries?
   3. Let the other European countries save their banks. What is the cost to the current generation and to which countries?
   4. Let the banks fail. What is the cost to the current generation and to which countries?
2. Continue giving money to Greece and watch them continue to waste it. What is the cost of this to the future generations and to which countries?

Where is this analysis from the EU, Euro Zone, European Commission, ECB or IMF?

NewWorldParty.org: Europe's "Stealing from Children" goes into Overdrive

wow...all that text and not a factual statement in there...

below are Excel spreedsheets with the raw data from the GAO website

the New Deal Reform Programs were funded with excise taxes. this is what Ron Paul wants to revert back to but they only account for 10% of federal revenue at this point, not a viable option.

Budget of the United States Government: Historical Tables Fiscal Year 2012
http://www.gpoaccess.gov/usbudget/fy12/xls/BUDGET-2012-TAB-1-1.xls

Table 2.3???RECEIPTS BY SOURCE AS PERCENTAGES OF GDP: 1934???2016
http://www.gpoaccess.gov/usbudget/fy12/xls/BUDGET-2012-TAB-2-3.xls

* This table shows the increase in defense spending to be the greatest contributor since the 70's, it has increased 20% and accounts for 68% of discretionary spending
Table 5.4???DISCRETIONARY BUDGET AUTHORITY BY AGENCY: 1976???2016
http://www.gpoaccess.gov/usbudget/fy12/xls/BUDGET-2012-TAB-5-4.xls

 

[lnvanry]

I don't believe that Germany's bond issue has anything to do directly with Germany.

When the world recession started, Germany was the first country to make sensible cuts. They did everything they needed to do to get themselves back on track.

So what is Germany's issue? The EU.

Countries like Greece and Spain are weighing it down. The EU can cut Greece go if it comes down to it, but if Spain crumbles, it make kill the Euro / EU.

It has a lot to do with Germany...German banks own lots of PIIGS debt. A vulnerable banking sector makes for a vulnerable economy. I won't deny that the "guilt by association" has not impact on the worst bund market ever since WWII, but its not just the EU.

 

[LAM]

Germany's exposure to Greek debt is no more than 20Beuro, US banks have also loaned monies out that they got for free from the FRB to Euro banks so they also have some indirect exposure, near 7-8B. all this stuff is peanuts compared to the trillions in bond derivatives held by US banks.

 

[irish_2003]

when currency no longer has any value, woman have the ONLY thing left to barter with of value!!!