Haircuts: The Other Way to Save the Euro ~ The Risk Averse Alert

Tuesday, July 31, 2012

Haircuts: The Other Way to Save the Euro

The key challenge right now facing the trans-Atlantic banking system is credit market dysfunction. Bailout "works" only to the extent entities being "saved" are but small, manageable parts of a larger whole whose core credit market capacities are not compromised as a result.

Thus the dilemma facing the euro-zone vis-a-vis Spain and Italy. The hoped for bailout of these nations most certainly threatens the EMU's core credit market, which is in Germany.

Whether by an ESM levered via a "bank license" or an ECB willfully choking down more insolvent paper, the attractiveness of German bonds is sure to diminish as a result, putting upward pressure on interest rates at the euro zone's core and likewise raising solvency issues for many a German debtor whose position right now is being accommodated by falling rates on German debt — a condition that simply cannot last, no matter what, if any, scheme our criminal Treasury Secretary worked out this week in Europe. (Geithner is being interviewed on Bloomberg tomorrow morning, so we might get a sense of any scam he ventured, or whether his mission more so was to gain a better sense of how much pain the Fuehrer will need to inflict in order to impose the next installment of swindle on the road to banking dictatorship.)

Apparently there is a lot of squealing coming from the euro-zone's fascist heavyweights in Brussels protesting a growing chorus in Germany calling for Greece's expulsion from the EMU. Yet further Greek debt write down such an action necessarily would entail, indeed, is the only hope for the euro's near-term survival. This, no doubt, also is true of debt of many other national origins. It is not possible for private investors not to take a significant loss. It simply is not possible. So, Merkel's "commitment to the euro" has terms. Greece has got to go, and if more have to follow, so be it for German commitment to the euro.

Yet is not consolidation also vital to dictatorship? We have a borderless one called "globalization." An imperial system, financially rooted, in grave peril no less, and voracious for valuable assets on the cheap. An historic American adversary is today vulnerable, and as ever shameless.

Summarizing recent political diatribes, in light of this moment's peril the chance to firmly anchor what good there is behind today's precarious mountain of garbage awaits Glass-Steagall, national banking, and more work than you can shake a stick at. Not jobs. Careers! Livelihoods! Purpose for God that we could organize so and purpose for country that mankind graced with profound freedom to culturally develop advancing classical humanist ideals finds leadership in this small world. Easily this, no less, simply asserting the will and impressing it on the American political scene now, wherever this might take you.

You take an important British faction backing Glass-Steagall and Germany more or less forcing the issue, and you arrive at time for Congress to step up. As in right now, before August recess step up and pass H.R. 1489 reinstating Glass-Steagall. Seize this moment for all history reaffirming the American Revolution. Leadership turned to sophist jellyfish means it's time for new leadership.

(My God! Clouseau will get to the bottom of the raft of crimes we are relentlessly confronted with sooner than these so-called "leaders.")

Fast Money
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