Timmy Ambushed, Time for a Bond-Burning Party

September 18, 2011
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Once people start to use monetary policy there will always appear to be reasons suggesting it should continue to be used.” –  European Central Bank Governing Councilmember Jens Weidmann

“We will not allow another Lehman Brothers.”- Turbo Timmy Geithner

Turbo Timmy was sent home from Poland with his tail between his legs Saturday and Weekend at Bennie’s Bernanke  may have set the Fed up for an ambush on its dice-throwing 90 day maturity swaps supposedly with the ECB.  “We don’t think that real economic and social problems can be solved by means of monetary policy,” said German Finance Minister Wolfgang Schaeuble, speaking alongside Weidmann after the meeting of EU finance ministers and governors of central banks. “That has never been the European model and it won’t be.”  For the first time ever, a clear majority (60%) of Germans no longer sees any benefits to being part of the Eurozone given all the risks, according to a poll published Sept. 16 (FAZ article in German). Meanwhile, Greek Prime Minister George Papandreou has cancelled a visit to the U.S. and the Troika is reportedly calling for massive austerity.

So here we go again, bailout du jour histrionics followed by cold, stark reality. Greece faces a 769 -million-Euro interest payment on two bonds on the 20th and it seems that a slew of September 2011 CDS goes off on the 21 st, and much of that insurance was sold by Wall Street. Lately, and I think for good reason, there has been a slew of Greek default rumors. The best outcome for European banks would be a  Greek-structured default (that will come up short) on the 20th, so that at least the CDS bill can be sent to the U.S. rackets and speculators and probably the Treasury/Fed, so that they can socialize the losses on Aunt Millie.

In the meantime, the entire Republican field (at least superficially) is dead set against this socialization of loss. Of course, there is little transparency on this kind of thing or of who holds the Old Maid Cards. I don’t think the central banks know either, which is what makes the situation so dangerous. Little wonder the Fed is meeting for two days, and little wonder Europe told Timmy to go screw himself. Sure, somebody can give Greece 769 million Euros for an interest payment, but that’s no solution as over 750 billion in PIIGS debt matures ($90 billion Greek) in the next year. Interesting that once a key figure is out of the picture, the reality comments come out:

  • STRAUSS-KAHN SAYS GREECE CAN’T PAY BACK ITS DEBTS
  • STRAUSS-KAHN SAYS EVERYONE MUST ACCEPT LOSSES ON GREECE

No doubt, between now and then we can look for the European bailout rumor mill to start anew, as well as the worthless central bank global liquidity pumpathon into an insolvent situation.

Speaking of growing insolvency, James Grant on U.S. Treasuries: “People are flying for safety into a class of security denominated in the very paper money that others are flying from … Somebody has not gotten the memo.”

Earlier in the year when the Arab Spring arrived, I predicted a long, hot summer in the U.S. I don’t think I was wrong about that, just a little early. The Occupy Wall Street/Day of Rage  movement turned out about a thousand on Saturday[photos].

This is exactly what happened in Cairo and Madrid, when a day or two later tens of thousands showed. There was a huge amount of Twitter chatter on this Saturday. There was also a great deal of asinine online opposition that I suspect are paid psy-ops to discredit the message. Nobody is that stupid.  I was watching the livestream Sunday afternoon and the organizers were spending too much time hanging around the park (property of Bloomberg Financial) listening to themselves talk about internal process instead of protesting, but the energy began to pick up Sunday night.  There are now more people and leadership has shifted.  They look serious about tomorrow. The big question about Americans is can they get out from behind their Ipads and Facebooks and take action? We shall see. The one in Washington DC scheduled for October 6, which seems to have more hard core organizers behind it.  Day of rage was #9 Google search yesterday. It is a given however that these protests are  going to become par for the course in a late-stage crony kleptocratic system that is sucking the economy dry.

One Response to Timmy Ambushed, Time for a Bond-Burning Party

  1. Michael on September 21, 2011 at 3:27 am

    So it looks like US Pigmen are off the hook for billions of dollars in expiring today CDS’s. I would not be surprised if Greece defaults tomorrow. How all this works behind the scenes is beyond my imagination.

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