Monday, June 4, 2012

Europe Will Trigger US

The European mess proceeds with no reasonable solution possible. The problem countries are hopelessly bankrupt. Saving them is unlikely and may bankrupt the rest of Europe.
Tyler Durden expresses his opinion of the options:
From here on out, the alternatives have been discussed to death and are clear as day: either the ECB, and the global central bank syndicate, inflates away the debt, which can only happen if Germany gives the ECB a carte blanche to print up the the $3-5 trillion required to backstop the European financial system, or we proceed straight to an instance of “Odius debt”/debt moratorium/write down, which however with trillions in daisy-chained, rehypothecated, partly submerged within the broker-dealer mediated shadow banking system, liabilities permeating throughout the global financial system, the outcome would be a tremor that shakes the very foundations of the financial system, in the process also impairing the $1 quadrillion OTC derivative credit money pyramid. In other words: nobody wants to, pardon, nobody dares to do anything, and the best Europe, and by implication the world, can hope for is to survive day to day, without launching the terminal financial D-Day. Pritchard’s summary of next steps is expected: “The result of Europe’s policy paralysis is more likely to be a disorderly break-up as Spain – and others – act desperately in their own national interest. Se salve quien pueda.” Only it is not only Europe. It is the entire world. But it will start in Europe. And specifically Spain, which unlike Greece is too big to be swept under the rug. It is also a place where the zombies are now congregating.
Ultimately Europe will fail, although the hemlock they choose is still in doubt. Ultimately too, the interconnectedness of financial markets will bring the failure across the ocean to the US. Then we too will follow suit.
The inevitability of this results from the fact that all Western economies are paper-mache models of real economies. All are inflated to be bigger than they are by debt that cannot be supported.

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