Global Macro Trading Journal

Debaser82 · May 18, 2012

Quote from Specterx:

Of course the irony is that 'harmonizing' the system wouldn't actually change this dynamic: German taxpayers would still be forced to pay for retired Greek civil servants just as New York and California tax-cows are forced to pay for welfare benefits in Mississippi.

So it wouldnt change anything, despite bringing more stability to the well to do places... right?

This is why I always thought the Euro system to be superior as it is over a shared bondmarket.

The pain and disbalances pop up sooner for everyone to see and tackle rather then being burried in a single bond market leaving it to rot with nobody caring as it does not effect the main host.

Daal · May 18, 2012

I wonder if the lack of a VIX spike, -2%+ days and overall capitulation is a sign of people trusting the bernanke put and trying to front the 'buy risk assets for a few months after QE' trade

flipside21 · May 18, 2012

Quote from Daal:

I wonder if the lack of a VIX spike, -2%+ days and overall capitulation is a sign of people trusting the bernanke put and trying to front the 'buy risk assets for a few months after QE' trade

I think so. Markets all around the world are down big with routine > -2% declines, yet SPX musters pathetic declines not even -1%.

Specterx · May 18, 2012

Quote from Daal:

I wonder if the lack of a VIX spike, -2%+ days and overall capitulation is a sign of people trusting the bernanke put and trying to front the 'buy risk assets for a few months after QE' trade

Dunno but I think it makes the market vulnerable to a crash, if some sudden shock/panic were to occur in this oversold state.

Butterball · May 19, 2012

Quote from Specterx:

Of course the irony is that 'harmonizing' the system wouldn't actually change this dynamic: German taxpayers would still be forced to pay for retired Greek civil servants just as New York and California tax-cows are forced to pay for welfare benefits in Mississippi. Mobility of workers (and also students etc) is the best way of evening things out, but that's very limited in Europe and always will be so long as major language and cultural barriers remain.

It appears Germans don't mind paying; they just hate having little control over how it is spent. They transferred about 1.2+ trillion EURO from West to East after their reunification 1990. That's about 50% one year's worth of GDP. A harmonized tax and social system assured that nobody on the receiving end lived a better life than those paying. Across the EURO zone that isn't a given.

A harmonized social and tax system should have been implemented before the currency union -- not afterwards. Brussels bureaucrats hoped the currency union would be some kind of door-opener towards a 'United States of Europe'. In hindsight the EURO may achieve exactly the opposite.

Regarding South->North mobility, this article was quite interesting: http://www.spiegel.de/international...h-for-skilled-labor-in-portugal-a-824089.html

Daal · May 19, 2012

Squeeze alert
"zerohedge ‏@zerohedge
Of four polls published on Saturday, two put SYRIZA ahead and two put the conservative New Democracy party ahead - RTRS"

darkhorse · May 20, 2012

Even if Greece stabilizes, what the hell is Spain going to do?

http://www.telegraph.co.uk/finance/...ey-be-safe-ask-customers-in-Madrid-banks.html

And then there's this (think of the impact on German inflation fears):

http://www.reuters.com/article/2012/05/20/us-germany-wages-idUSBRE84J07S20120520

Then add in the real possibility that Facebust underwriters could fail in their $38 IPO support, and top off with still-expanding JPM losses and no clear deadline for unwinding the whale fail position.

This market feels totally fucked.

Specterx · May 21, 2012

Quote from Butterball:

It appears Germans don't mind paying; they just hate having little control over how it is spent. They transferred about 1.2+ trillion EURO from West to East after their reunification 1990. That's about 50% one year's worth of GDP. A harmonized tax and social system assured that nobody on the receiving end lived a better life than those paying. Across the EURO zone that isn't a given.

A harmonized social and tax system should have been implemented before the currency union -- not afterwards. Brussels bureaucrats hoped the currency union would be some kind of door-opener towards a 'United States of Europe'. In hindsight the EURO may achieve exactly the opposite.

Well I'd say this has much less to do with a "harmonized tax and social system" than it does with the fact that entities like Germany and the United States constitute genuine, organic national polities. The European Union is an artificial monstrosity imposed from the top, often against or at least irrespective of the wishes of its citizens. In recent years it's increasingly seemed to be little more than a vehicle for the 'parlor Bolshevik' political class to circumvent normal democratic accountability in pursuit of its socialist superstate wet-dream.

The "Euro-crisis" aspect of all this is really more about the exposure of these fundamental contradictions and political reality at odds with the Eurocrats' fantasies than any technical details of the system's construction. There is after all no fundamental reason why bankrupt countries can't be allowed to default, or why a default means they have to leave the EU, or why the Euro area can't just carry on as before if Greece, Spain, Italy et al do choose to leave - many countries are in the EU but not the Euro after all. The significance is entirely symbolic in that to allow any step backwards means admitting the socialist superstate dream won't come to fruition anytime soon. Bundling everything together and imagining these cataclysmic breakup scenarios is a Eurocrat propaganda trick, and the decision to throw so much good money after bad trying to prop up bankrupts is no different from a trader frantically averaging down into a losing position hoping desperately to regain BE.

darkhorse · May 21, 2012

Quote from Specterx:

There is after all no fundamental reason why bankrupt countries can't be allowed to default, or why a default means they have to leave the EU, or why the Euro area can't just carry on as before if Greece, Spain, Italy et al do choose to leave - many countries are in the EU but not the Euro after all. The significance is entirely symbolic in that to allow any step backwards means admitting the socialist superstate dream won't come to fruition anytime soon.

A bit more than symbolic at this point... there are credible arguments that indelicate attempts to end the current arrangement could tear europe apart. (Though doing nothing could result in chaos and implosion also.) Logistically speaking, how they got here matters less than the dangers faced from the present point onward.

If the significance of such were truly "symbolic" only, markets would be ignoring Europe. As it stands, global crisis fallout is a real threat no matter what happens.

ammo · May 21, 2012

if people pulled there money out of the banks and let the banks fall,that might be the same as bankruptcy,a large credit debit wash,i think this is what they are trying to avoid at a very expensive price, where the result would not be so bad, if the government's were to print money for new banks with new debt free books,like war,they would sacrifice the fewest people, jobs, for the good of the rest..oversimplified..but ..