Things that make you go hmmmm
Another must read hmmmm report, courtesy Grant Williams.
Now we reach the part where the truth finally dawns that the words spoken long ago by JP Get- ty are actually not just an amusing motif fit for the front of a t-shirt or a fridge magnet:
“If you owe the bank $100 that’s your prob- lem. If you owe the bank $100 million, that’s the bank’s problem”
The sum total of bailouts offered to Europe’s prodigal offspring is mounting daily, but the Achilles Heel of the entire construct continues to be the Target2 payment system which has been so assiduously ignored by most observers yet followed so closely by my friends at Zerohedge for many months now.
This problem remains below the radar of most observers but, I suspect, will turn out to be the straw that breaks the camel’s back
(Zerohedge, 6 July, 2012): We have some good news for our German readers: in the month of June, your implicit cost of preserv- ing the Eurozone (read the PIIGS) via TAR- GET2 funding of current account and various other public sector deficits and imbalances amounted to only €1 billion/day, down from €2 billion in June. We also have some bad news, which is that Europe’s negative con- vexity ticking inflationary time bomb, which guarantees that with every month in which nothing is done to undo the Buba’s onboard- ing of liquidity risk, the risk for an out of con- trol implosion of German, and implicitly all European monetary institutions, rises exponentially, and just hit an all time high of €729 billion.
To everyone who naively believes that a deus ex can come out of stage left and somehow reverse this guaranteed loss to German tax- payers in the form of even more guaranteed inflation down the road, we suggest you short the chart [previous page].
Full Hmmm Jul 15 2012