Sunday, August 07, 2011

Euro Statement II - Translated

Well we have just had the addendum to the original Euro Statement, Team Macro Man once again try and offer some clarity through their translation.

1. The Governing Council of the European Central Bank (ECB) welcomes the announcements made by the governments of Italy and Spain concerning new measures and reforms in the areas of fiscal and structural policies. The Governing Council considers a decisive and swift implementation by both governments as essential in order to substantially enhance the competitiveness and flexibility of their economies, and to rapidly reduce public deficits.

Italy and Spain are now in the same bucket as Greece and, likewise, should do exactly what we tell them if they stand any chance of us pretending we can help.

2. The Governing Council underlines the importance of the commitment of all Heads of State or Government to adhere strictly to the agreed fiscal targets, as reaffirmed at the euro area summit of 21 July 2011. A key element is also the enhancement of the growth potential of the economy.

Hey, we don't make up these rules for you just to keep breaking them, so please, come on guys, at least try and look like you are playing by the rules.

3. The Governing Council considers essential the prompt implementation of all the decisions taken at the euro area summit. In this perspective, the Governing Council welcomes the joint commitment expressed by Germany and France today.

Thanks to Germany and France reading their emails despite being on holiday we were able to have a quick conference call to patch something together. Now get on with it, we should be on the beach.

4. The Governing Council attaches decisive importance to the declaration of the Heads of State or Government of the euro area in the inflexible determination to fully honour their own individual sovereign signature as a key element in ensuring financial stability in the euro area as a whole.

We've studied Neural Linguistic Programming and hope that by saying "inflexible determination to fully honour" enough, they really will.

5. It equally considers fundamental that governments stand ready to activate the European Financial Stability Facility (EFSF) in the secondary market, on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability, once the EFSF is operational.

We have just had a report from the 12yr old quants in our analysis department suggesting that there may be some stresses in the Italian and Spanish bond markets. Now whilst it might have been as plain as day to the rest of you for the past 18 months, we are now pleased to say we can move one slow step forward to doing the bleeding obvious and hope that no one dissents.

6. It is on the basis of the above assessments that the ECB will actively implement its Securities Markets Programme. This programme has been designed to help restoring a better transmission of our monetary policy decisions – taking account of dysfunctional market segments – and therefore to ensure price stability in the euro area.

We are going to buy hopefully enough Spain and Italy tomorrow (with whose money we aren't sure) to "shock and awe" the evil speculator out of our garden. Lets hope that works and you don't realise how screwed we really are.


Anonymous said...

can't wait to see how mkts react....

Anonymous said...

thanks guys for the quick take ... so ... like, are they gonna buy 1 trillion of bonds ... steralized? cause that would be a laugh!

unsteralized and zee germans bundesbank types will be heading off into the sunset ... people will look at webbers resignation as the benchmark to follow.

Anonymous said...

>> In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”

Slightly off-topic, but is anyone else concerned by the increasingly hostile rhetoric coming out of the CCP?

Not so much that they would dump Treasuries, just that gradually, over time they might act in one way or another on this mad, we're going to take over the world stuff...

Alexander Rose-Innes said...

I'm just amazed that China has the gall to continually take the high-ground after they helped cause the bloody mess. They've been taking the piss with their currency manipulation for years. They do seem more sang-froid and lenient on the woes of Europe, too. Remember all that nonsense earlier this year about how sound Spain and its banks were? This hostility is indeed strange.

Alexander Rose-Innes said...

2 trillion euro in unsterilised bond purchases coming up. EFSF is a non-starter in Germany now. No ways they will send themselves to the poorhouse.

Jayzuz, gold at 1715 as I type.

A classic case of the price becoming the news, eh MacroMen?

Alexander Rose-Innes said...

What are the odds on huge increases in margin requirements on commodities this week?

Chaos Theoretician said...

"I'm just amazed that China has the gall to continually take the high-ground after they helped cause the bloody mess. "

Well, the Republicans explicitly rejected Obama's desire for a large long-term fix, and go blame Obama for the downgrade because there is no long-term fix.

When you're an ass, chutzpah comes free.

Anonymous said...

"What are the odds on huge increases in margin requirements on commodities this week?"

Coming right up...followed by a shitstorm in AUD$ and mining stocks.

Anonymous said...

So how does this bond buying get paid for?
Who pays for it?
What effect is it supposed to have on growth?

In other words what is supposed to be the net effect because if we are again going to see that the cost of this is passed back to the tax base I can't see the net outcome being positive in anyway.Just looks to me like money being shuffled around to prevent some systemic event happening right now ,but ultimately if the tax payer is going to fund this it must detract for what they have to spend on other forms of consumption ,or dare I say it investment.
Looked at that way it appears to me the Euro tax payer is being told they will invest in the Euro union staying together as opposed to make their decision over how and where they spend/invest this money.

MoreLiver said...

Very nice - you made it again as my quote of the day.

Secret Sauce said...

So eurotrash is trash, treasuries is trash, what's a po' fella' to do? Seek shelter in equities? Ouch.

Dividends still pleasure me of course but looking at the marks can be painful.

Belektron said...

US downgrade and 10y treasuries rally.
Is QE3 ready to be (pre)announced tomorrow or do we have to wait until Jackson Hole again? Seems like a buy everything opoortunity for those who have some hair to spare.

Owe Jessen said...

"unsteralized and zee germans bundesbank types will be heading off into the sunset ... people will look at webbers resignation as the benchmark to follow.

Anonymous said...
12:55 AM "

Welle, Weber did actually resign effective April 30th, so you might have a far leading indicator there.