Qu'est Châteaux Eurobolleaux 2011?
Tuesday, June 21, 2011
Just as in 2010 the Europeans turned to the US for policy guidance and were offered Little Timmy's post crash STFU policy, 2011 sees them turn once again to the US for help with the same reoccurring problem. Now despite what might have been imagined before the implementation of the US QE2 program about 9 months ago, it hasn't been a complete disaster. In fact, if you were a European observer noticing that their stock market goes up, faith and the price of their bonds goes up, their currency starts to drift off making their exports more competitive and they hardly see much of a rise in domestically led inflation, then you might just rub your chin and say. "Hmm, I wonder".
To TMM it looks mightily like the Europeans are dreaming up a cunning new plan. Not as cunning as trimming their toenails with a scythe as the German's tried last year with their banking regulations, but pretty close. For it would appear that just as US QE is coming to an end, the Europeans are going to be embarking on a second attempt of their own version. Far from EVER calling it QE (or even Qu'Est) it will be deftly disguised as European Himalayan pink salt - a fantastic exotic remedy for the Euro woes. Which of course to TMM means a set of generic structures wrapped and presented to the unsuspecting bond holders as a "cure all".
Sharp observers have pointed out at various times over the past 18 months or so that the ECB's LTROs, SMP and balance sheet expansion in general are essentially just an indirect implementation of QE. Banks merely bought their respective governments' paper and promptly delivered it to the ECB's window in exchange for newly-printed Euros. Of course, that only worked until the ECB realised that they essentially had become Europe's "Bad Bank" and were going to take a bath if and when the Club Med eventually restructures. Naturally, the A-Team panicked and embarked upon brinkmanship with the Eurocrats, in the form of threatening to hike rates to force them into action.
And so it seems that the latest offering from the Eurostriches is to increase the EFSF to 780 Gigaeuros from 440 Gigaeuros. But just as Pink Salt is only salt with some pink, expanding the EFSF is just turd with but more turd added. As we know, the EFSF is capitalised such that the bonds it issues are rated AAA, with the proceeds then used to throw good money after bad lending to the iPIGS. Of course, it's not just the Chinese that are buying the EFSF paper, it's also the European banks themselves, because the risk weighting on these bonds is obviously far lower than that of the Greek government. So the banks then deliver the paper to the ECB window in exchange for newly printed paper... which isn't really that different from the ECB's first "no, it's not QE really" QE attempt. Except this time they've tried to get the Eurocrats on the hook for the eventual payout. Now, the thing is, the ECB's balance sheet is about 1.9 Teraeuros, to which TMM reckon we should add the EFSF's size given it all looks like smoke and mirrors to us, meaning that they just magically increased the money supply by about 15%.
And of course, the longer this goes on, the more privately held debt gets paid down, and the bigger proportion of the remaining debt ends up in the hands of EU institutions. The debt may get larger and larger but the scheme can run on happily until:
- The guarantor countries can no longer maintain their own credit ratings due to the guarantees they are making to support an AAA vehicle.
- The populations of the guarantor nations realise how much they are in hock for and insist on no more.
- Someone stops buying the EFSF issues.
- EFSF holdings are marked to market and someone realises that the EFSF haircut isn't enough.
- The ECB resigns itself to the money supply increase being permanent (Google "Zimbabwe").
- Embarking on expanding the EFSF is like mainlining financial smack while snorting woonga and smoking crack. Hooked until an early death. There is no escape unless the debt you own turns good and becomes profitable again. Mr Madoff tried exactly the same thing but apparently borrowing new money to repay existing shareholders whilst hoping those Russian railway bonds that paper your downstairs toilet become redeemable for face is called a Ponzi scheme and is illegal.
- Mucking around arbitraging credit ratings has only led to two things in the past. Fat bonuses for the inventors and massive suffering for everyone else. TMM await the calls to "mark EFSF paper to market".
Even if the Europeans do get away with pulling off this issuance trick shouldn't the FSA, SEC and other non-European governance bodies ban the purchase of such obviously dangerous products? And if they were too, would then the only money the Europeans could rely on be the Grey funds that arrive in suitcases whose owners expect their money back in full or else horrible things happen?
But of course the really cunning part of all this is that there is no government or central country running this thing. The ECB is still a quasi-governmental body reporting solely to an unelected parliament in Brussels. Who do you actually go to when the poop hits the prop to get your money back?
Now as for that QE. We have already covered how we think this is indirect QE, but in TMM's eyes, it wouldn't be unimaginable for somewhere down this financial maze of collective (i.e - no-one's) responsibility, someone may notice that just buying Greek bonds for the EFSF with money that has electronically been created will be damn site easier than all this AAA issuance guarantee stuff. No-one would either notice or mind really. We mean hey, Qu'Est the harm it did to the USA?
英国智库：停止第二轮救助希腊 违约已成定论
新浪财经讯 伦敦时间6月21日(北京时间6月21日)消息，英国智库Open Europe今日发布报告，呼吁各国停止对希腊进行第二轮金援，因为希腊违约已成定论。若是现在违约，债权人需要一笔勾销五成的现有债务；但是若继续救赎，等到2014年，三分之二的债务将化为乌有。
在这份名为《是时候停止救援希腊》的分析报告中，该机构列举出，欧盟成员国眼下对希腊的风险敞口是3110亿欧元，其中法国和德国对欧盟的金融敞口分别为820亿以及840亿欧元，英国为103.5亿欧元。
“若让希腊金融体系挺过2014年，在已有的1100亿欧元的金援计划之外，第二轮金援计划至少需要满足1220亿欧元的资金缺口。”
但是该机构认为，上述仅是一个乐观估计，因为前提是希腊很好的控制其赤字目标，并践行私有化的承诺。但现在希腊是否能满足这两项要求仍是个未知数。
“如果希腊无法继续削减开支并私有化国有资产，那么到2014年，希腊所需的金援盘子总量将达1660亿欧元，这还不排除该国可能需要第三次外援。”按照该智库的统计，目前希腊的债务比GDP超过150%，即使是第二轮的债务以旧购新成型，希腊仍然有可能在接下来的数年内违约。因为目前希腊的经济增长率和债务负担都显示出，他们很难在2014年之前实现在金融市场的自给自足。
债务危机背景之下，总有人要最终接盘，承受损失。而金融援助越多，结果只能是赔得越多。
“我们估计，第一轮希腊债务将有五成被一笔勾销，这将给欧洲经济整体带来1230到1440亿欧元的损失”，此间，有235.5亿欧元体现在第一轮希腊金援计划的双边借贷中，将由欧洲纳税人承担。除此之外，还有445亿到657.5亿欧元是欧洲央行所提供担保，并产生的间接成本；另有270亿欧元是其他私人投资人所需承担的。
债务重组的成本也在随着时间推移不断提升，因为希腊的债务负担显然将在未来数年之内继续累加。要将希腊的债务负担降低到可负担的水准，有一半的现有债务需要被“一笔勾销”。如此推算，到2014年，2/3的希腊债务可能需要被“一笔勾销”——这意味着债权人的损失只会越来越大。
若是有第二轮的金援计划，各国所出具的官方借贷会逐渐替代现有的私人板块所面对的风险敞口。这意味着欧洲纳税人所需承受的借贷成本激增，约合每户欧洲人需要支付1450欧元，来为希腊的债务危机买单。
该智库分析称：德国与法国显然是目前希腊债务危机中两个最大的债主，所承担的风险敞口分别为837.6亿欧元和817.3亿欧元。所以他们遇到的问题更为严重，表明两国政府均有足够的理由以抵制，或者至少是顺延债务重组。(郝倩 发自英国伦敦)
ES Force Ramped Above 150 DMA, At 10 Points Divergence To Risk Basket
Today's ramp in stocks, courtesy of the ES, was purely an attempt to force technical short covering at the 150 DMA which was just retaken, as was the April 18 swing low, as well as 1.44 on the EURUSD. Yet on the other hand, theispersion between ES and the broader risk index is now at a 2 day wide, or about 10 S&P points. It seems that stocks are once again doing their headless chicken dance certain that either the Greek vote of confidence will pass, or Bernanke will announce QE3 tomorrow, or both, while everything else is reacting in a far more subdued. The two technicals heading into the close will be the push to close the spread on one hand, and the ongoing short covering from the 150 DMA on the other, as well as the second consecutive day in a row with a 150 pip move higher in the EURUSD on Chinese buying.
