Seeking Alpha

So put together, the total is €750B ($966B) of shock and awe to save the eurozone -...

So put together, the total is €750B ($966B) of shock and awe to save the eurozone - €440B in loans from the nations, €60B from EU emergency funds, and €250B from the IMF - but it better be enough, as signals from the U.K. and from German elections suggest no future help is forthcoming. Euro +1.3% against the dollar; S&P 500 futures +2.6%.
Comments (55)
  • Well, they've done everything they can do, just like the US. Since we are leading this race to the bottom you can already see the effect of fading stimulus - so maybe a year or so and the EU is in trouble again. What will they be able to do next?


    No one wants to take their medicine, work on fixing the problems, and lay a foundation for a stronger fundamental based futures. Nope. Only borrow heavily from the future to stay the course now. Very very short-sighted.
    9 May 2010, 10:33 PM Reply Like
  • "the effect of fading stimulus?"


    You mean the the over 230,000 jobs the private sector just added?


    And with the earning season we've just had, how is all this a BAD thing? Just trying to understand your rationale....
    9 May 2010, 10:41 PM Reply Like
  • The impact of .25% interest rates cannot be understated.


    The problem is that "things" then become dependent upon that ultra low level.


    What happened the last time a liquidity driven bubble(s) faced increasing interest rates (remember 2008?)?


    The only thing left since they can't pay a negative interest rate is to pay interest on reserves - that only helps banks - not business.


    The simply fact is that the average joe is hurting, continues to hurt, and will be hurt further by the actions taken by our govt (and now the EU, China, etc.).
    9 May 2010, 10:47 PM Reply Like
  • Even thought 230,000 jobs were added, unemployment rose to 9.9%. I wonder what the number would be if they included the number of discouraged workers that dropped out of the labor force.
    9 May 2010, 11:04 PM Reply Like
  • Real unemployment is guesstimated at around 20%.
    10 May 2010, 01:24 AM Reply Like
  • That's the Fed Funds rate. That is not what commercial entities are charging ...


    If you look at money supply growth, it is now flat. M2 has been flat since late last fall.


    It's the fiscal stimulus together with the earlier declines in the dollar that is spurring aggregate demand and output.


    You caught in this mindset that refuses to distinguish structural deficits and macroeconomic deficits. Obviously the US has a lot of both, but the big difference between 2006 and 2009 is macroeconomic.
    10 May 2010, 02:12 AM Reply Like
  • "no future help is forthcoming". We all know we can't take that one "to the bank", as it were. The issue with the EU, as we've seen in recent weeks isn't that they change the goalposts; no, they redesign the entire playing field and the goalposts are transitory "targets".


    There's a lot more to play from that "orchestra" until they cue the Fat Lady, I suspect. We get rid of one and what do we have left, PIIS?


    9 May 2010, 10:37 PM Reply Like
  • The problem is that the EU acted too slowly. Today they did the right thing.


    And yes, there will be fiscal consolidation at the end of the road.
    10 May 2010, 02:18 AM Reply Like
  • 99.9% of the human population just got poorer relative to the governments of the globe...
    9 May 2010, 10:39 PM Reply Like
  • No, they didn't...
    75% of the human population (roughly, those in the developed/developing nations) are MUCH BETTER OFF now that the markets can react out of current information, and not out of fear....


    Yes, there are nations in Europe that are not in good shape right now. Neither are we - but these individual nations don't have the benefit of having the most widely held currency on the planet.


    Getting rid of the fear will allow these nations to get their finances in order (call it an intervention, if you will...). If they fail to respond to it in a timely manner, kill them off (economically speaking, of course).


    But since they still have workers, and jobs, and resources, why not let them crank out whatever output they can, and let the rest of the world get on with the business of, you know, free markets?
    9 May 2010, 10:51 PM Reply Like
  • You can't print to prosperity, its a zero sum game...


    Wealth is relative to another & the more this printing business goes on the more the government controls more of the wealth. Its more government control over the economy plain & simple.


    Markets fearful? The big boys have TONS of money & can hit up the printing presses at any time... the market going up is fear... fear of holding paper currency my friend....


    Last I checked printing money in the US was to extend unemployment & continue to give incentives to those who don't work & punish middle class savers who won't be able to get ahead with wages not outpacing inflation.


    You're short sighted man, governments are controlling a higher percentage of wealth until its near 100%... I'm surprised you really applaud these actions.
    9 May 2010, 10:59 PM Reply Like
  • Dude, what fantasy land do you live in?


    Quit quoting widely panned BLS numbers and go look out your front door. Everyone employed? Housing stabilized ( ohwait for the the housing stimulus effect to end in about 2 weeks ) .


    For deflation to still be increasing with as much money being printed and dumping from the skies is scary.


    We should have some inflation by now, but nope.
    9 May 2010, 11:00 PM Reply Like
  • If you give a thumbs down, please explain why... I'm up for a debate.
    9 May 2010, 11:17 PM Reply Like
  • That's rubbish. It's been proven time and time again that you can print your way out of a recession. Long term economic development is entirely distinct matter. But fiscal and monetary stimulus can bring an economy back to full employment
    10 May 2010, 02:19 AM Reply Like
  • Nightfly,


    M2 growth is flat now.


    The Fed did not print money. They injected funds into the banking system, which the banks to a very large extent sat on.
    10 May 2010, 02:22 AM Reply Like
  • Excuse me. The banks were required, as part of the deal to hold cash to "balance" their liabilities, to hold onto that cash and NOT lend it out. In exchange, they receive a modest interest payment from the Fed. Why lend if you can do nothing with no risk and still get a decent return on capital?


    Thus the bleak credit picture for small business in fly over country. As in the 30's, the Fed has drained credit from the system for the very people who could bring the country out of the recession, if history is a relevant indicator.


    Interesting strategy.
    11 May 2010, 09:24 AM Reply Like
  • This kicking the can down the road unless meaningful reforms are instituted.
    9 May 2010, 10:47 PM Reply Like
  • Meaningful reforms! HA! The government reform! Not a chance, that may hurt GDP & their bond yields may go up!
    9 May 2010, 11:01 PM Reply Like
  • This isn't a game where it is acceptable for government to lose and speculators to win. If money doesn't work; power will be employed, If not by current leaders; then by their replacements. Playtime is over.
    9 May 2010, 10:53 PM Reply Like
  • Zorrow
    you're exactly right - playtime is over.


    It's time for Greece, the rest of the PIGGS, soon enough the UK, Japan and the U.S. - TO STOP ADDING DEBT ON TOP OF DEBT and have the fantasy that is a solution to the problem. Actually I think they know it's not a solution - just a stop-gap to get re-elected.


    Losing my patience with the attitude of letting our kids deal with our debt build-up. Also that 'governments' must win. The market WILL WIN one way or another. The EU has just perpetuated the problem.


    I guess if there's enough zorrow's out there, they'll continue their hoodwink program(s) - per Obama - "to instill confidence in the markets"....Over leverage got us into this - and you praise actions that keep adding to it.
    9 May 2010, 11:20 PM Reply Like
  • History is on my side. Chaos is unacceptable. Order will win out. Governments are the agents of order. Whether its the Knights Templar, or the Barbary pirates, or speculators using leverage without any insurable interest to bring down currency, the problem will be corrected. That time is fast approaching. Certain transactions will become unlawful. Tax cases will be prosecuted to the max. Cooperation among countries threatened will increase, in terms of laws and enforcement. Remember a policeman can always bust you for something. All they need is public outrage. People are mad and they are getting madder. People will not allow speculators to attack their currency and the sovereignty of their nation. Weak leaders will be replaced. People whining about violation of failed paradigms will be seen as part of the problem. History repeats itself. Anything that has happened, can happen again, anywhere.
    9 May 2010, 11:48 PM Reply Like
  • Zorrow says
    ...or speculators using leverage without any insurable interest to bring down currency, the problem will be corrected.


    Currency traders perform a intregal price discover mechanism based on perceived mood and risk. Beats the hell out of relying on the ratings agencies or TBTF banks and central bankers for market reads.


    Right now, governments are the agents of disorder.
    thankfully, we'll have elections to determine the next bunch that will try and manipulate the markets.


    10 May 2010, 12:06 AM Reply Like
  • How can governments be the agents of disorder? That is this ludicrous libertarian nonsense. And what are you electing? Say it with me a _____
    10 May 2010, 12:10 AM Reply Like
  • It was the late Mayor Daley of Chicago whose quote was "The police are not there to create disorder, they are there to preserve disorder." That's the US president's political background talking...
    10 May 2010, 12:12 AM Reply Like
  • History is on both sides. Pushes by governments for extreme "order" results in oppression, riots, uprisings, underground economies, mistrust of authority and a passive-aggressive populace.
    10 May 2010, 01:26 AM Reply Like
  • Please get over your fetish or run off to the nearest sex shop.


    The last thing you worry about during a severe recession is government debt, which is often your only salvation (particularly when the banks are not lending and there is a liquidity trap).


    The time to worry about deficits is when the economy is at full employment and growing briskly. It is the structural deficits, ironically associated with Republican administrations (Reagan/Bush) that are the greatest cause for concern.


    Go to a sex shop if you can't overcome your fetish ...


    PS: I have no debt whatsoever.
    10 May 2010, 02:28 AM Reply Like
  • That's horseshit. CMOs were not created by government. The rating agencies were not government puppets.


    Buffet is correct: Credit default swaps are weapons of mass destruction. A form of insurance where the insuring party has no obligation to set aside reserves ....


    It's naive as well as historically inaccurate to claim that governments cause most of the economic problems.


    Any hard nosed look at history shows private market instability is the norm.
    10 May 2010, 02:33 AM Reply Like
  • to further nightfly's point

    U.S. President Barack Obama and German Chancellor Angela Merkel spoke by phone about the importance of EU members acting to build confidence in markets.


    Nothing to do with facing the problem - let's just hoodwink the pheasants and it should work out ok.


    Wonder who's orchastrating our premarkets?


    the more they screw around with borrowed $, the harder the fall -- and there's enough sense out there to realize it. In the next day or so - great time to lighten up on long positions...
    9 May 2010, 10:57 PM Reply Like
  • "...let's just hoodwink the pheasants and it should work out ok." Hell, let's just open pheasant season an it should work out great.
    10 May 2010, 01:45 AM Reply Like
  • Your moralizing is boring and shows more populist outrage than real insight.


    Interbank lending rates are heading back. The last time that happened was the fall of 2008 and it caused a liquidity crisis that was largely responsible for the recession's severity.


    Certainly there are rogues in this story. But you will never understand the crisis if you treat it as a morality play.
    10 May 2010, 02:39 AM Reply Like
  • Spock, Our species is blessed or plagued with moral considerations. If you could feel emotion, Spock, you could understand our problems and our ultimate quest. It's not just cold logic,Spock, like the temperature outside this hull.
    11 May 2010, 09:01 AM Reply Like
  • Any business that requires 0.25% funding cost should be put out of its misery, and that includes the carry trade.
    9 May 2010, 10:59 PM Reply Like
  • Great. A trillion dollar bailout for Europe. Aren't you bulls sure glad the financial crisis ended last March? It's time to start loading up on stocks again, I'm sure.


    How much of that $1trillion is coming from American taxpayers?


    When was the last time Europe bailed out America?
    9 May 2010, 11:10 PM Reply Like
  • France was helpful during the US revolution in the 18th century <g>
    9 May 2010, 11:24 PM Reply Like
  • France DID help us 250 years ago. Of course, France helped us because they HATED England and wanted England to be driven out of North America so they could take over all the colonies there. That plan didn't work out, however.


    France's help was more to support a proxy war against their #1 enemy than to help America.
    10 May 2010, 01:36 AM Reply Like
  • Michael,


    If the Euro falls against the dollar, then US recovery, which is being driven by exports, will weaken.


    If the crisis continues, interbank lending rates will rise and we will repeat the fall of 2008.


    Your comments show little analytical sight. Save them for your morning coffee at the local cafe.
    10 May 2010, 02:41 AM Reply Like
  • Hi Michael,


    Our help for France during WWI and WWII was driven not by our love of France but by our desire to defeat the Germans.


    You're trying to split hairs, but you don't have a good command of the facts.


    French aid to the US was crucial in winning the American Revolutionary War and it was motivated by idealism to a large extend.


    Key aspects of the US Constitution including separation of powers were pulled out of the writings of French political authors.


    I can criticize French in many respects, but fair men are fair.
    10 May 2010, 02:44 AM Reply Like
  • Futures look good : )


    ASX 200 went up 2%+ in early trading, amazing given the goings on in your neck of the woods and the carniage on EU markets on Friday.


    We got the "good" news 5 minutes before Japan opened ... up until then our SPI futures were 60+ points down. Nice 160+ and 3%+ turnaround in a couple of minutes.


    I've got a hunch that smart money will be selling into this not buying, we'll see.
    9 May 2010, 11:26 PM Reply Like
  • I seriously hope nobody was massively short over the weekend... We might hit limit up on the S&P futures
    9 May 2010, 11:29 PM Reply Like
  • crank up the bear killing machine and look out...its coming.
    10 May 2010, 12:43 AM Reply Like
  • So a little QE from the ECB… A little QE from the FED… Let the race to the bottom begin! By next fall I could be heating my house with worthless dollars/euros!
    9 May 2010, 11:29 PM Reply Like
  • Currencies are not being debauched.


    Quantitative easing has not resulted in inflation. Neither in Japan nor the US.


    Quantitative easing is typically in situations where there has been massive asset deflation after a speculative bubble. You are not going to get an inflation mentality after people has seen 20% to 50% of their net worth eliminated ...
    10 May 2010, 02:48 AM Reply Like
  • Whew, thought I missed the boat on moving some remaining money the hell OUT of the market ... tomorrow's melt up will be a great opportunity to do so. This is like giving an alcoholic a drink so they can relax and figure out how to stop drinking.
    9 May 2010, 11:34 PM Reply Like
  • Good one Rooftop, but unfortunately very true and very scary to realize these are governments that have made these decisions.


    To those who blindly put faith in governments and feel they can do no wrong, I seriously hope you take the time to wake up to reality. It isn't about political biases, but instead the fact that people make up governments and they make some good decisions and very bad mistakes.


    Papering over a liquidity crisis that has arisen from solvency risks at the sovereign level is no real solution to an inevitable reckoning of various sorts. The very fact that government officials took the short-term solution to masking a long-term problem shows that this time these people have made a very grave mistake.


    Greece showed us last Thursday how imposing austerity measures that really don't solve a deficit/debt problem can create something far worse than market selloffs-- social unrest. The bigger fear/risk now is just how ugly things will get when the 'markets' realize bailouts are no longer solutions to structural issues in the global economy. By the way, contagion has spread the moment central banks decided to work together on a fiat monetary system. It isn't about toxic debt or assets that create liquidity crises inasmuch as t is anything derived from fiat currencies have that potential so it's the solvency of that country representing that currency that should remain the focus and solution. The full faith and credit i.e. confidence is only as good to those who believe it. This belief does not come from printing near a trillion dollar package, but the actual lomg-term viability that nations can show they can grow without further debt-- this unfortunately seems near impossible with the engrained rhetoric amongst government officials and their crony economic advisers.
    10 May 2010, 12:27 AM Reply Like
  • they came up with a decent solution. guarantees to restore confidence, increased austerity to reduce the pressure long term.


    the Eurozone is going to grow more slowly, the Euro will devalue progressively over the next 6 to 12 months. if they handle it right and it seems like they have finally twigged to what they need to do - they should get out of the mess - just as the US is getting out of its mess.


    also social unrest in Greece is not unusual. have you been there? they are in the streets at the drop of a hat but it is a sideshow. social unrest in Germany now that would be a problem. you see that and you take action. a bunch of communist trade unionists and two bit anarchists running through the streets of Athens is business as usual. it is like French farmers blocking freeways with milk tankers - it would be odd if it didn't happen. get a grip.


    10 May 2010, 12:51 AM Reply Like
  • The US is 'getting out of its mess'?


    The mess is our insolvency. We are getting out of insolvency how? By lowering interest rates and taking on more debt?


    Think again.


    The blip up in the economy was from government spending (more debt). We're living in denial. The denial ends because investors won't buy country bonds without higher rates since all government debt is becoming junk bonds, risky as hell.


    More debt never resolves a debt problem. (Oh, maybe I can just refinance. I've been doing it for years...!)
    10 May 2010, 01:46 AM Reply Like
  • There is no insolvency. You keep throwing mud at a wall and hoping it will stick.


    Show us some figures.
    10 May 2010, 02:51 AM Reply Like
  • insolvency means not being able to pay debts as they fall due.


    if you had run a business or just understood basic finances you would get it that borrowing to work your way out of trouble is not an unusual tactic if the underlying business and cash flow is strong.


    as the US grows - and it is growing - and tax receipts rise - which they are - as we speak - then you have a shot at getting out of it.


    the people who complain about the actions of the Fed and Treasury are the ones who also were crying about unemployment and lack of growth.


    we did what we needed to do to deal with the panic and now things are improving. we had to start the patients heart we used a lot of juice to do it but the patient is worth the trouble. ok so there are scorch marks on the chest. so what. the patient is alive and looks he will make it.


    you should be grateful - you ingrate. quit complaining or do something about it. Start a movement to demand higher taxes and less expenditures. call it the dinner party.


    10 May 2010, 05:20 PM Reply Like
  • Another big big band-aid for a ruptured carotid artery. The problem: you are too much in debt. You have to raise your taxes to pay your debts. You have to cut government spending to pay your debts. Oh, by the way, here's another trillion dollars in debt....use it wisely.
    10 May 2010, 01:43 AM Reply Like
  • Right, and plunge


    Are you really that ignorant? Have you not studied what happened to the US economy in 1937 when FDR listened to his conservative economic advisors


    He raised taxes and cut spending while the US economy was still at 14% unemployment (down from 25% in 1932) and what happened?


    A recession inside the Great Depression ...
    10 May 2010, 02:54 AM Reply Like
  • "Puff...puff...pass..."


    Everything is just great 'American in Paris'.


    I suggest buying your conviction in the markets, go "all in" on Bank of America, Citibank, and bonds in Greece, Portugal, Italy, and Spain.
    10 May 2010, 03:13 AM Reply Like
  • It's pretty funny that in your sarcasm you've identified exactly how to make money.
    10 May 2010, 07:34 AM Reply Like
  • Eb. Take your own advice. Not a bad strategy.
    10 May 2010, 05:21 PM Reply Like
  • What we often forget is that investment in this market is not driven by principle, as you might know it, but the absolute principle of money is the only reason to be there. If you confuse that with anything else, you're wrong footed and not well placed to play the market.


    Does anyone else fully into the market at this time appear to have any interest other than the money? Right. Know the playing field.


    'American in Paris' isn't always wrong, he just has his idols in line. Principles extraneous to money are not relevant to the market.
    11 May 2010, 09:31 AM Reply Like
  • Im not sure this will change anything except the time frame for EU D day, that the market futures are exploding isnt reassuring because "nothing has changed" you dont give an addict drugs to ease his pain, you get them in detox and then rehab to try and change behavior for a different and better future, good luck trying to get EU members to starve its populace of all the goodies they have grown to expect from their government
    10 May 2010, 07:43 AM Reply Like
DJIA (DIA) S&P 500 (SPY)