10 I seriously, seriously, have a sinking feeling that Europe pulls the trigger after the close tomorrow. Failed bond auction, no “Euro” bonds, Japan being downgraded futures plummeting. I may be wrong, but when it rains it pours and I honestly wish they would just get it over with.
If you think I’m wrong let me know why, I’d loved to be coerced out of my apocalyptic pondering. If you think that Europe doesn’t fail period I would like to challenge you to a mental duel, between two gentleman. I am to fall upon the blade of thy sword, a certain “Big Boss,” will take up my fight. He is indestructible.
10 Responses to “This is a dire prediction…”
Dr Fly
Sure feels that way. My only argument would be when everyone is caught leaning one way, the trap door appears.
Woodshedder
I think Fly is right. Deep down inside, my gut says that even Merkel can’t let things get flushed. However, in reality, a flush is what is needed. Yes, lots of pain, suffering, etc. I don’t pretend that it will be fun. A reset is a reset though. Like Schiff’s article, it could re-position Europe as a dominant player when America’s last hand is finally dealt.
DrBigBoss
you two have to watch this Kyle Bass presentation. You’ll both love it. He’s obviously pretty bearish but I think he’s one of the best economists in the world today. Plus he is a big boss from Texas who drives a hummer and made >$1b shorting US housing.
I only get paid to make money and have made piles of money being long in size in my past but I think this video should be required for anyone managing money.
http://www.youtube.com/watch?v=WWgtzwqWh60
fake amish
what do you mean by “pull the trigger”? and … what is the trade if it happens? thanks.
DrBigBoss
I think he means they “pull the trigger” on this stupid experiment they’re running and either let someone default or let someone out of the EU so they can devalue their currency and gain some global cost competitiveness.
I have not found a single “orderly” default in regards to impact on local banking system historically. If one exists I’d LOVE for someone to correct me though as I don’t claim to be an expert.
I’d think the trade would be to get short in size or just buy some way out of the money puts. I have no edge on the timing though so I’m playing it by just sitting in cash and waiting to buy people’s margin calls.
Yogi & Boo Boo
DBB – I think you’re right about orderly default. The periphery has issued debt in another nations currency. I can’t see how the banks operating in Euros will magically convert to a local currency that will be devalued. I would suspect depositors will pull their Euro(effectively Deutsch Mark) holdings from the weaker nations banks and put them somewhere safer from devaluation. I would expect any solution to take some time. Time that the markets may or may not give them. I agree with you that cash is the safest place until the smoke clears.
rhino
This is the way I see it, Woodshedder you threw the overhand right to the chin. 6months of shit storming after default(s) will suck,but then think about the buying opportunity. The Western World’s economies could grow in almost post WWII fashion.
DrBigBoss
Hard to say and wish I disagreed. Sentiment couldn’t be worse but at the same time sentiment was pretty bad in early 2008 too.
Mexico devalued (similar to default in effect) in 1994 and Argentina in 2001 both chose to announce their default around xmas/NYE. Due to the banking and capital controls required for sovereign default you need time to throw those up so you usually get these kind of events announced on friday and/or during holiday season.
Once Merkel openly discussed Greece leaving the euro (and implicitly converting to Drachma and devaluing all assets/liabilities in their banks to devalued Drachma) now I imagine they are having an epic bank run from Greece.
I think the question as to when Europe has to pull the trigger is how bad that bank run has accelerated. Maybe they blow it up Friday, maybe they wait until xmas/nye because it’s a more global holiday or maybe they shock us all and pull a rabbit out of their hat and come up with some “solution” that I can’t anticipate.
DrBigBoss
I think we all know what’s coming though, the only real thing worth debating here is the timing.
Yogi & Boo Boo
OK, next summit is 12/9. Do you REALLY think they can keep this chit together till then? Cash. US Dollar denominated.