Monday, May 10, 2010

Candles Burn Brightest Just Before Extinguishing.

The Eurozone, with critical U.S. assistance, has decided to go all in and pull a U.S. banking cabal response to a justifiable attack by market participants on the EU's flagging monetary system. Everyone, at least for the moment, is jumping wildly back into the pool, but all that has changed is that more funds (that no one actually has except by creating more debt) have been thrown at a system that is untenable due to an excess of unserviceable debt.

I am now almost as certain as I am of my own name that attempts to prop up the western financial system will end reasonably soon, and result in an entirely new paradigm. Unfortunately, the pain that will ensue on the way to the new paradigm will be unlike anything modern civilization has ever experienced. That includes the last Great Depression. In the meantime, President Obama, who has somehow managed to at least equal his predecessor in awfulness, has nominated a Goldman Sachs stooge to the Supreme Court.

12 comments:

Debra said...
This comment has been removed by the author.
DED said...

...and the market's up 400 points today on the news.

attempter said...

I agree that the absolute pinnacle and then the commencement of the terminal descent are near.

So the only questions are, how protracted, how painful, and what are the options to attempt redemption, and what are the odds?

Odds, probably not very good. But as long as I think there's any kind of chance I'm going to keep trying.

Thai said...

Now the Goldman-Kagan connection is interesting but it is making my tooth a little sensitive. ;-)

I guess I just have a hard time thinking it is anything more than one of those 7 degrees of separation issues (I freely admit I could be the biggest sucker on the planet in this regard).

As for collapse: I do find it interesting that the Euro is back below 1.28 and the TED spread hasn't really budged.

Credit strain is out there bidding its time

Edwardo said...

Yes, indeed, Thai, the bailout package doesn't seem to be doing its job with respect to The Euro. And that, after all, was the primary target for the enormous, but not enormous enough, emergency funds. As an M.D. you will appreciate that the crack is having demonstrably less and less effect each time it is applied. I fear we are going to go no bid in many markets in the not too distant future. It will be something your kids can tell their grandkids about.

One shouldn't think in terms of conspiracy, at least not in the crudest sense, with respect to the the SJC appointment. Our entire system is, as they say, "captured", and the man in The Oval Office is weirdly inured to his own corruption. Ergo, Goldman connections as far as the eye can see.

Thai said...

This Krugman piece I alluded to at Hell's saloon suggested that it is QE now but will be sterilized in the future.


Krasting (who is my new FX source unless you can suggest a better one for the less financially literate types like me), says any significant QE by the ECB will drop the Euro like a stone (which is what Krugman wants).

I'm sure you saw this.

Thai said...

Oops, Krugman

Thai said...

Also, I don't really get the impression that defense of the Euro was the issue. (I think this is a smokescreen for the voters who know no better). The defense is for this.

... As you say, the FIRE economy. ;-)

Edwardo said...

Quite right, Thai. It's for the French equivalent of the FIRE economy. I first encountered Krasting's view at ZH. Apparently those same banks that sleazy Sarkozy has rescued are now shorting the Bejesus out of The Euro.

Thai said...

Edwardo, I responded to your cross dressing alter ego here ;-)

Be well

Edwardo said...

My cross dressing self (I am a complex system and prone to internal contradiction) has read your response and says, thanks.

Thai said...

Be well my friend