FINALLY. It seems that the world is waking up to the idea of putting to use the barbarous relic so despised by the financial gurus like Charlie Munger and Warren Buffett. A May 25 BLOOMBERG article by Brian Parkin and Jeffrey Donovan hinted at some type of debt-sharing plan: Not a Eurobond in a traditional sense but more of a collateralized debt obligation and a concept of a REDEMPTION FUND. The fund would take all sovereign debt more than the 60% of GDP level and deposit the excess paper in a central fund. The fund would be collateralized by the GOLD RESERVES of all the European nations–an amount more than 10,000 TONS OF GOLD. As the debt levels of the abusive nations recede–and taking back the maligned paper–the TROUBLED NATIONS COULD DRAW DOWN THE COLLATERAL.
Posts Tagged ‘bailout’
Notes From Underground: Sarkozy will borrow Trichet’s Mask and go as Marshal Petain for Halloween
October 30, 2011The more things in Europe are reported as “calming,” the stranger the news stories that emanate from the various European capitols. In the weekend Financial Times it was reported that President Sarkozy told his citizens that they needed to act more like Germans. If France is to avoid slipping into a terrible sovereign DEBT CRISIS the French are going to have to adopt German-style frugality and a better work ethic. Sarkozy believes that the 35-hour work week must change for as France worked less, the Germans invoked the HARTZ IV program of structural changes to its labor force. Under the leadership of Gerhard Schroeder, the German unions voted for labor austerity in exchange for business not exporting jobs to lower-cost regions in Eastern Europe.
Notes From Underground: To The Talking Heads On TELEVISION … Europe Is Not the U.S.
September 28, 2011As the sellers of snake oil and the creators of the corporate cult of personality take their “bows” for breaking the story about the European bailout that roiled the global equity markets, I had to step back and realize that the European Polity is not the U.S. While Geithner and others are held captive to the vagaries of the DOW JONES and S&P, it seems that the Europeans, and, especially the Germans, are not enthralled by markets going up and how many days of a winning streak exist. There are actually decision makers who are not captured by the price of Deutsche Bank or Siemens. In the U.S. it is only the stock market reactions that seem to dictate the decisions made in Washington. Some in Europe seem to want to effect policy for the longer term regardless the cost to certain financial entities. If forcing the issue on how large a hit private bondholders are to take means that markets dive … so be it.
Notes From Underground: The Irish have another package worth 85 billion euros (and the NEGATIVE FEEDBACK LOOP CONTINUES)
November 28, 2010Another weekend and another emergency meeting in Europe as the EU attempts to stem potential DEFAULT in the PIIGS. The language that emanates from these meetings is difficult to analyze because it is so convoluted. The eurocrats make decisions and then the markets attack the intended recipients and drive the yields on sovereign BONDS higher, which prompts another meeting. This has been going on for a year as the markets have gained the ascendency over the politics. Frau Merkel has repeatedly said that politics must gain the upper hand but for now that is only rhetoric.
Notes From Underground: Sorry readers, we missed an important FT piece last night
June 10, 2010First, in a PRELIMINARY ruling, the German Constitutional Court (GCC) failed to block the nation from taking part in the European “bailout.” This was the case filed with the Court by lawmaker, Peter Gauweiler, a Bavarian from Merkel’s party. The court did acknowledge that it will continue to review the case. The Court said:
“Even a temporary retreat of Germany from the rescue plan could,in the government’s view,jeopardizes the rescue fund ,at least in the eyes of the financial markets.”