I urge you to follow the euro crisis today and see how the marketplace deals with what is essentially a failed system. With the sovereign bond markets now in crisis mode as Germany stumbles at the auction block, the market is sending a clear signal that we are in crisis mode. As readers of the Daily Capitalist know, we have been discussing the unsolvable nature of the crisis and the European Monetary Union for a long time. The marketplace never lies; it may not always be right, but it is the most accurate measure of what money thinks.
So now, with the mighty Germans failing to sell all of its bonds in today’s auction (€3.644 billion—$4.92 billion—of the €6 billion in 10-year bunds on auction for an average yield of 1.98%), money is flowing out of Europe seeking the safety of our leaky boat, and European sovereign yields are climbing.
This clip today from CNBC has an interview with Oliver Sarkozy, The Sarkozy’s half-brother, who is managing director and head of Carlyle’s global financial services group. (The Sarkozy family name is: Sarkozy de Nagy-Bocsa.) His observation is that there is a $10 trillion banking crisis that will probably end with a TARP type bailout and monetization of debt by the ECB. It is a very interesting interview.
financial stability is not the same as macro economic resilience. By continuously trading off resilience for stability, these banksters will destroy the global financial system itself, unwittingly.
http://www.macroresilience.com/2010/10/18/the-resilience-stability-tradeoff-drawing-analogies-between-river-management-and-macroeconomic-management/
Clearly from what Mr. Sarkozy says, Euro is heading much lower relative to the US dollar and this will play out over the course of next year.
During the interview live from bucolic Maryland with Sarko’s 50% brother, you could hear geese in the background. Surely the Roman geese in the temple of Juno on the Capitoline Hill, which saved Rome from a nightly attack by those pesky Gauls.
They were still quack-quacking away when Sarkozy had gone off camera and Altman was explaining the abyssal equity downside.
The ducks quacking in the background are hilarious, as is the whole tone of the conversation. It’s like watching a bunch of accountants deciding the best way to put out a fire at a fireworks factory with fire trucks carrying gasoline. They’re sure if they just apply the gasoline the right way, everything will be fine.