In the realm of loving and promoting the irrational over the rational expectations of the MODEL BUILDERS, there is no better poster child than German Finance Minister Wolfgang Schaeuble. As I warned Mario Draghi to unpack his speedo, today BLOOMBERG NEWS ran an article, “SCHAEUBLE DECLARES MARKETS WRONG AS EUROPE COASTS INTO VACATION.” This is the German finance minister who has the audacity to proclaim that the markets are wrong and head off for vacation. It seems that the German hierarchy is convinced that all is well because the BUND market is healthy. Is Schaeuble so naive as to think that strong BUNDS reflect the health of Europe? Don’t German policymakers understand that the BUNDS and SCHATZ are at absurdly low levels because many other Europeans are “packing their suitcases” with EUROS so as to transfer their wealth to the perceived safety of the German financial system and thus for its haven status? It is astounding that the EUROCRATS believe that the markets will wait for the decision makers to return before any further market action will take place.
Posts Tagged ‘euros’
As I looked at the photos from the G-8 conference, this caption became obvious. The German Chancellor is the belle of the ball as her Germany has what the World is crying for: surplus wealth in a debt-laden world. The pressure was on Chancellor Merkel to provide enough EUROS for short-term triage on the European nations hemorrhaging wealth from the huge amount of debt owed to many global creditors. As the communique revealed, there were few concrete proposals provided by the G-8 “brain trust” except that Germany “ought” to provide the financial backstop for all of Europe and, thus, the rest of the world. President Obama is well aware that any financial collapse in Europe will weigh heavily upon his reelection potential.
It is without doubt that the HUBRIS of George Bush’s arrogant landing of a plane on an aircraft carrier and declaring “MISSION ACCOMPLISHED” has been the operative model for the political elite of Europe. The European DEBT crisis has been in full bloom for the last year and everything the immediate elements of the crisis have been dealt, the news release basically gives a tip of the hat to MISSION ACCOMPLISHED. European leaders have continued to proclaim victory over the markets only to be punished for their early exuberance. The true measure of the debt crisis is measured in BOND DIFFERENTIALS and of course the price of credit default swaps on sovereign debt. Contagion has spread to the PIIGS as speedy as most swine flu epidemics.