Goldman: A Clean Resolution From Friday's Summit Is Now Ruled Out; Outcome To Fall Short Of Market Expectations

The schizophrenia continues, this time as Goldman lays out the "Failure Frday" hypothesis in an attempt to incite some waterfalling risk off-taking, leading to escalating interventions by domestic governments (all of which captured just for this eventuality) and culmiating with the unleashing of the puppet head of the ECB, but not before GS has had the opportunity to sequester some assets on the cheap. We have rehashed this outlook so many times we won't repeat it again, suffice to say: those who want to know what happens, need merely to look at what happened in 2008, and who ended up gaining the most. In the meantime, this is what Goldman expects of the "summit to end all summits" - "Our bottom line is the following: the ‘clean’ solutions that would have seen clear resolution of that impasse appear to have been ruled out following Monday’s German/French meeting. That makes something altogether fuzzier likely to emerge from Friday, and this risks falling short of market expectations. The sequencing that we believe is being followed will be delayed further into the new year." Said otherwise - yet another failure. Which confirms that the Christmas rally over the past week has been nothing but. And all such "career risk" mitigation exercises in lemmingry, end in the same way: with someone defecting first.

Investor Demand Soars For German 5 Year Paper As Germany Refutes FT Rumor, Lofty Summit Expectations

Following late November's disastrous 10 year Bund auction, in which the goal seekers saw everything from a failure of the repo market to the Bundesbank trying to fail the auction on purpose, yet which was nothing more than a simple case of little demand and high supply, today, following a steady leak wider in yields in the entire bund curve, Germany sold €4.09 billion in 1.25% 5 year bonds, with the maximum amount of €5 billion selling easily following bids for a total of €8.67 billion.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 07/12/11

Submitted by RANSquawk Video on 12/07/2011 - 06:38 ETC Morning Briefing RANSquawk

UBS' Advice On What To Buy In Case Of Eurozone Breakup: "Precious Metals, Tinned Goods And Small Calibre Weapons"

Three months ago, Zero Hedge presented the first of many narratives that started the thread of explaining the "unmitigated disaster" that would ensue should the Euro break up, which in the words of authors Stephane Deo and Larry Hatheway, would leads to such mutually assured destruction outcomes as complete bank failure and/or civil war or far worse. Because if there is one thing the banks have learned in the aftermath of Hank Paulson, is that scaremongering when bonuses are at stake is the only to get taxpayer money to fund exorbitant lifestyles.,, Today, Larry Hataway has released yet another sequel to the original piece, focusing on this so very critical week for Europe, which as Olli Rehn said, must find a solution by Friday or see the EU "disintegrate", in which the vivid imagery, loud warnings and level of destruction are even greater than before. In other words, Europe has 4 more days, something which S&P tried it best to remind Europe of, as the alternative is "or else." And here comes UBS to remind everyone that anything but a "fix" to a system that was broken from the very beginning, would be a catastrophe, captured probably the best in Hatheway's recommendations of assets to be bought as a hedge to a Euro collapse: "I suppose there might be some assets worthy of consideration—precious metals, for example. But other metals would make wise investments, too. Among them tinned goods and small calibre weapons." But even that is nothing compared to the kicker: "Break-up runs the risk of becoming one wretched scenario. Sadly, however, it can’t be ruled out, just as it would have been improper to rule out the horrors of the first half of the 20th century before they happened." And there you have it: a reversion by Europe to the perfectly stable system from a decade ago, is now somehow supposed to result in World War. And with that the global banking cartel has official jumped the shark, just like the FT's latest rumor earlier today did the same by indicating that the well of European "bailout" ideas has officially run dry.




Social Security 2011 – Another Bad Year

European Banks Dash For Fed Cash As Dollar Swap Usage Soars, Funding Squeeze Now Shifts To Euros

As expected, virtually everyone, or a total of 39 banks (compared to 2 the week prior), scrambled to receive dollars from the ECB following the cut in the USD swap line rate from OIS + 100 to OIS + 50. Specifically, $50.7 billion in 84 day swaps (34 banks asking for dollars at a new and reduced rate of 0.59%) and $1.6 billion in 7 day swaps (5 banks at 0.58%) was just opened for a total of $52.3 billion. The expectation had been that just about $10 billion would be demanded, indicating how close to the cliff Europe's banks had been. This compares to just over $2 billion in the week before, and demonstrates the severity in the funding market that threatened to topple European banks like dominos last week until precisely a week ago the global central bank cartel announced an emergency dollar funding band aid. Reuters confirms: "Banks took more than $50 billion from the European Central Bank on Wednesday in its first offering since slashing the cost of borrowing dollars, a sign that some euro zone banks have problems finding dollar funding as the region's debt crisis intensifies." Elsewhere dollar libor continued to rise, passing 0.54% for the first time in years. This will continue rising as the self-reported dollar funding cost closes down to the OIS+50 differential, or where European banks can borrow from the Fed. And now that the dollar funding squeeze has been confirmed, all eyes turn to the ECB's LTRO announcement tomorrow. "What really matters is what the ECB does tomorrow afternoon, and in that especially what they do with the long-term refinancing operations (LTROs) and on the collateral rules," Societe General economist Michala Marcussen said. "What would be extremely helpful right now is if we get longer maturity LTROs." The ECB is expected to announce ultra-long 2-year or even 3-year refinancing operations after its meeting on Thursday." Needless to say, all these are stopgap liquidity measure to fix what is increasingly a pan European (in)solvency crisis, and thus will achieve nothing in the long run. And what is worse is that the non-USD liquidity indicators have once again hit an inflection point and turned negative: 3-mo Euribor/OIS spread rose to 1.002 vs 0.999 yesterday, near last wk’s high of 1.006 which was most stressed since March 2009. In other words, as we have been saying, the funding squeeze has now managed to shift away from USDs and is impacting the EUR market itself, something the Fed has no control over.

Is the Total Economic Collapse of the U.S. Nearly Upon Us?

 

 

Does the Indefinite Detention Bill Foretell Future?

 

 

John Hathaway: Desperate Fed to Provide Unlimited Liquidity

 

 

The Goldman Saching of Europe

 

 

12 Very Disturbing Examples Of Radical Social Engineering By The U.S. Government

 

 

Hyper Report: 111207 – You Might Be A Terrorist Suspect If…

 

 

UPDATE: Senators Seize Opportunity to Stab Americans in Back Again

Please consider making a small donation, to help cover some of the labor and cost for this blog.

Thank You

I'm PayPal Verified