Saturday, March 23, 2013

"Draghi Where's your Euros"

Whilst we wait for the outcome of the current round of Cypriot negotiations, let's have a jolly song, or shanty, to cheer things up. With no apologies whatsoever to Andy Stewart, TMM give you their version of the Scottish classic "Donald Where's your Troosers"

"Draghi Where's Your Euros"

I'm back for a while from the Cyprus Isle
Where if you want your cash you'll need some guile
And all the locals shout with bile,
"Draghi, Where's your Euros?"

Let the debt blow high and the growth blow low
We'll levy a tax on your depo
Russia won't pay so the the Cyp's all go,
"Draghi, Where's your Euros?"

I sat in on a conference call
There was slippery talk between them all
And I was afeared that Europe would fall
'Cause they wouldn't give them Euros

Let the debt blow high and the growth blow low
We'll levy a tax on your depo
Russia won't pay so the the Cyp's all go,
"Draghi, Where's your Euros?"

I went for a loan to a German town
But all I got was a Schaeuble frown
And a scream from the Lady who won't turn around,
"Draghi, there not your Euros!"

Let the debt blow high and the growth blow low
We'll levy a tax on your depo
Russia won't pay so the the Cyp's all go,
"Draghi, Where's your Euros?"

The Germans have bound this Superman,
And the Troika want another billion
I've done everything that I possibly can
So don't ask me for Euros.

Let the debt blow high and the growth blow low
We'll levy a tax on your depo
Russia won't pay so the the Cyp's all go,
"Draghi, Where's your Euros?"

Let Cyprus leave or let them stay
It doesn't matter either way
We can't arrange a piss-up in a breweray
We've buggered up the Euro!


Corey said...

Very catchy. Draghi must be pulling his hair out at all this. Guess we will finally get to see what that bazooka looks like after all.

CV said...

Brilliant TMM... incidentally I completely agree with the sentiment shared here this past week. It is too easy to blame this on the "special" depositor structure in Greece, they are hanging them out to dry to play tough against Spain and Italy.

Oh and watch that ELA. We had the discussion during the second restructuring with Greece. Do we really want the ECB to take the POLITICAL decision to oust a country from the eurozone.

Oh, and that comment today that the ECB cannot support bankrupt banks?! You must be kidding me, where would Spanish and Italian banks be without a €1 trillion in LTRO liquidity?


Leftback said...

Nice one. The apr├Ęs-ski always seems to perk up the poet behind the Polemic.

A few people are making the same point today as cpmppi did last week, that the Cypriot Euro is no longer the same as the Berlin Euro, not least because you can't get your mits on more than 100 of them at a time....

Capital Controls: Has Cyprus Left the Euro?

Absent another piece of Sunday evening Eurobllx brinksmanship, the non-equivalence will be registered on Monday in the markets. As is often the case with small insignificant "default events", the pain may be felt in the most unexpected places.

theta said...

Be careful with your your bearish positions, the pain trade might still be up. Plus, given current thinking by market participants, the most rational reaction is to buy equities. Bonds are not safe, deposits are not safe, at least equities are supported by the Bernagghi put so small depositors from all over Europe could start lifting equities like there's no tomorrow. Same way London housing market became a safe heaven (rental yields are <3% now)

Leftback said...

Let's wait and see what the deal is before we jump back on the Euphoria bus. The haircuts in the bad bank are going to be big. Someone is going to be burned.

The contagion argument still holds, once people have time to think about this. Spain has more than a few bad banks, and capital flight to Northern Europe could be on again in no time at all...

Anonymous said...

C Says
At first blush taking out the ECB the final deal appears to respect the capital hierarchy. Might have been marginally helpful if they had done that in the first place,but even so depositor losses in any form would always carry ramifications for future moneyflow.

I'm less interested in the debt deal than I am in the detail re capital controls.

In any case this is the start rather than the end for Cyprus. You simply cannot dislocate the largest sector of the economy like this without it is going to mean significant unemployment followed more than likely by spending cuts and tax increases which will exacerbate the contractionary spiral. Pretty much the same process we have already seen elsewhere in Europe.
The scale of a drop in Cyriot economic activity is clearly small in relative terms,but that isn't the issue now.The issue now will be will that process be savage enough to keep an increasingly militant population front and centre for a EU exit. A constant market uncertainty. I think so.

Wider depositor disruption in EU on a significant scale I don't know. Conditioned elevated response to future bank/debt issues I think is certain. People will be much quicker to pull the trigger first and ask questions later.

Anonymous said...

C says
Nothing like a bail-in to wake up bondholders.

I think we continue to see what started awhile ago.Credit repricing and obviously more intense the closer it is to the financial sector. Watching as well the equity credit sensitive to see if they continue to follw suit.
Guess my vague notion here is we are seeing a risk topping process via rotation as opposed to any meaningful continuations. Summed up that means I expect a full correction before I see enough risk reward above worth grabbing.
Think that put's me back in the minority as more may be looking for the 5 to 10% whereas I think the former will be only be part of a larger market clearing move.
Within that there are some obvious swings to take.
That is me looking at UK,but I would expect it to be fairly generic.