The collapse is in progress right now. I think people have this mistaken view of historical time... that a big event has to take place within a well defined 24 hr period or so... and that it has a well defined beginning, middle, and end. Debt deflation is going on right now real time, in Greece. And with it, all the social, political consequences of it. Crime, protests, business closures, families moving, immigrants going back to their countries like Albania, etc... The ECB bought time - that's it. And it is a global phenomena. Imagine what Europe would look like if the US didn't stimulate, or if the ECB didn't intervene. Germany has a surplus, but where do you think a lot of that surplus is coming from? It's created by someone else's debt, somewhere else. That's why the US is pissed at Germany and the EU's "austerity." To a degree, they are free riders. The US needs to stimululate and spend, otherwise, its economy drops like a rock, and the entire world suffers. So the process is delayed, or a best, stretched out. By the way, Greece was not bailed out. German and French banks were bailed out. You know why I say that? The greek people are feeling austerity - what are the German and French banks feeling?
The ECB's actions are making someone whole again, that under a capitalist system, should have experienced failure. To me, that's printing, and it ultimately distorts the economy, and creates the circumstances for a greater catastrophe down the road.
Well, sure thing, it's entirely possible that the EU powers that be have decided that, in the interest of preserving the political union, losses on an eventual sov default have to be socialized. If that's the case, what they're doing is just making sure the default when/if it happens, occurs in an orderly fashion, without disrupting the mkts. My point is that, given sterilization, the EU program is not, strictly speaking, a turning on of the printing press.
how did i get roped into this i'm as bearish as anyone, the only things i'm long are ultra-rare art (10/of a kind or less) and physical silver. i wouldn't bank on any fiat currency over the long run- but there are more and more people every day so anything ultra-rare should do fine just as it did through the great depression. my comment is simply saying don't believe the rally that has happened over the last 18 months and use it as a reason to invest further- things might not collapse tomorrow- but it is an eventuality at this point. but starting to short now is just as dangerous as getting long because you can't be certain when the collapse will occur.
Whose losses are we discussing here? Deutsche Bank? Societe Generale? Yes, those two institutions are politically important, I would think. More so than the human constituents of the EU.
Who gives a rat's ass about SocGen's and Deutsche's losses, Misthos? Come on, I would think that you of all people wouldn't succumb to the media frenzy. Do you know how much Greek debt is owned by SocGen and BNP combined (and that's including both banking and trading books)? Arnd â¬8bn, i.e. nothing. I still don't have the Deutsche numbers, but if you take Commerzbank and all of the Landesbanken, they own smth like â¬5.3bn, which is less than nothing. The big gaping black hole is sitting in Hypo Re, but, guess what, that's already fully owned by the German taxpayer (which are the human constituents of the EU). I could also wax poetic about the AIB situation, but that's a whole different kettle of fish. The point is that surely by now you have seen that, unfortunately, banks are TBTF. That means that banking losses, once they're big enough, have to be socialized in the interest of stability (or at least that's the consensus among the powers that be). Every single govt has had to do this, so Europe is no exception. Moreover, I fail to see the moral issue you're implicitly alluding to here. Gains from the bubble were enjoyed by all and sundry, so why should the losses not be?
Indiscriminate and irresponsible lending has not fully been punished, IMHO. And what is the result? TBTF institutions that are still calling the shots, setting up the entire system for a more catastrophic collapse in the future. In a capitalist society, a failed borrower loses the ability to borrow in the future, just as a failed lender should also lose the ability to lend. The TBTFs should have been nationalized and wound down. Banks create money out of thin air. They lend it into existence. They lose it? New fake money and creative accounting solves the problem (temporarily) while those outside of the banking system feel the real pain.