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Monday, December 26, 2011

The short life of the Fourth Reich

Have you ever noticed that those who say failure is not an option and refuse to consider any backup plans almost inevitably end up failing? Applying that principle, what can one now conclude about the Euro?
The reason is that in Europe, the mere admission that Plan B is a possibility, apparently set off a chain of events that makes Plan B an inevitability: "...officials there feared that releasing the information could fuel further doubts and instability in the euro zone."

And so Europe is left to fend on its own, with the mere mention of the possibility of failure being completely ignored, as the mere contemplation of failure is not only no longer an option, but apparently an outright admission of defeat. Needless to say, the fact that European banks have no way to hedge anything any more, CDS trading having been killed, thank you ISDA, and now supervisory bodies themselves telling banks to not even consider Plan B, is enough reason why the LTRO will be an abysmal failure.

Because one does not need to be a rocket scientist to realize that when everyone is telling you that even Plan B is improper, then it is all too clear there is absolutely no Plan Whatever.
Game Over for the Euro would appear to be fast approaching, even faster than I had expected. The Fourth Reich looks to be even shorter-lived than the Third One.

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