Posts Tagged ‘GCC’

Notes From Underground: People Get Ready For The ECB Money Train

December 3, 2014
In a paean to Curtis Mayfield and the Chambers Brothers:
“People get ready,there’s a train comin’ “
It is not a LOVE train, nor PEACE train, but the market hopes a money train from Mario Draghi, the conductor of European Central Bank monetary policy. The train is scheduled to depart from Frankfurt, Germany at 6:45 a.m. and the world’s currency, commodity and equity markets are hopeful that EUROS will be providing the fuel for this locomotive.


Notes From Underground: Dear Mr. Fantasy, Or, a Tribute to Mario Draghi

February 6, 2014

The ECB and The Bank of England delivered their interest rate announcements, and, as I expected on Tuesday, the result was absolutely no change to current policy. The FED had paved the way for maintaining the present course and the Europeans were certainly not willing to risk upsetting the markets. What surprised me was the fact that the EURO CURRENCY rallied strongly as President Draghi presided over a press conference in which he put on an act of stonewalling and obfuscation that made Alan Greenspan look like a freshman debater. Wow, Mr. Draghi can evade the best of questions and believe me I listened to the entire press conference and the questions were of a very high caliber. Mr. Draghi did invoke a new strategy and that was lengthening his answers so no one could remember what he had really said in the beginning. The bottom line is this:


Notes From Underground: The Final Note on the German Constitutional Court

June 12, 2013

Some issues become tedious to discuss but importance is not diminished by the tedium. While the issue of OMT is extremely important for global financial markets, its significance is understated in the U.S.-centric financial press. The European press had two important pieces on the issue of the ECB and possible violation of German law. First, the Telegraph had a piece by Ambrose Evans-Pritchard, “Germany’s Brother Gladiators Battle Over Euro Destiny in Constitutional Court.” The title of the article reveals the importance of the issue as it will draw lines in Germany behind the two key issues represented by ECB Vice Chairman Jorg Asmussen and ECB Executive Board Member and Bundesbank President Jens Weidmann. The Weidmann argument is that the OMT PROGRAM “blurs the line between fiscal and monetary policy.” It is not the mandate of the ECB to bail out insolvent states. The argument for the Asmussen group is that the OMT program saved the breakup of the EU and safeguarded the monetary union. But that of course raises the question of what institution provides the financial backstop for safeguarding the EU?



September 12, 2012

The German High Court sustained the ESM but laid out that the BAILOUT FUND had to stick to its agreed cap (EU190 BILLION) and that as suspected any further moves to enhance the bond buying program would have to be decided by the BUNDESTAG. It sustained the position of Chancellor Merkel for the time being, thus it makes President Draghi’s move to keep the period of financing to the short-term (LTRO FOREVER) a wise strategic move. The BUNDESTAG will be under pressure to adhere to the concept of “STRICT CONDITIONALITY” as Merkel and Schaeuble will have to be very attuned to the mood of the German citizenry as the Merkel government faces national elections in 2013.


Notes From Underground: The GCC WILL ANNOUNCE AT 4:00 a.m. EST … Until Then, “ALL QUIET ON THE WESTERN FRONT”

September 11, 2012

The equity market recouped some of yesterday’s loss as the entire trading day was position squaring ahead of the German Constitutional Court rendering its decision on the constitutionality of the ESM and the role of ECB moves to buy the primary issuance of European sovereign debt. There are many pundits trying to place probabilities on the court’s decision but I am not briefed enough in the BASIC LAW of Germany to even try to make that bold a prediction. To my mind, I will concentrate on the language the court uses and what position it takes in directing the German government to have to consent to the WILL OF THE PEOPLE. Will it direct the Merkel administration to return the issue to the Bundestag for approval of the new enhanced ECB “bailout” or will it suggest that the entire Maastricht Treaty needs to be approved by the entire citizenry through a REFERENDUM?


Notes From Underground: Elections, Court Rulings, and Other Tales of Ordinary Madness

September 10, 2012

The markets were suffering from fatigue as they struggled to digest the liquidity driven rally of global assets last week. This week will not provide respite as the financial world awaits the outcome of three potentially major market-moving events. The first mover will be the ruling by the German Constitutional Court (GCC) in Karlsruhe as the HIGH COURT will determine if the ESM established by the EU as a bond buying mechanism is in breach of Germany’s basic law, in that the ESM undermines the fabric of German politics by consigning the BAVARIAN BURGHERS to the credit responsibility of the EU profligate states. It seems that the COURT must deal with the concept of “TAXATION WITHOUT REPRESENTATION” as the transferring of German wealth to the European treasury needs to be done by the Bundestag and not by mere cabinet decision or by the complicity and complacency of the central bank.



July 11, 2012
First: The German Federal Constitutional Court (FCC) has put off an immediate decision on the constitutionality of the ESM, so the market has some breathing room and FINANCE MINISTER SCHAEUBLE has some time to define exactly what the Merkel government has signed on to. The EURO held steady today as the attention turned to the U.S. and the FOMC minutes.

Notes From Underground: How Many Pinheads Can Sit Atop An Angela?

May 22, 2012

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.