The Ticking €34 Trillion Timebomb

The Wall Street Journal ran an interesting article yesterday. It was about the ECB’s Outright Monetary Transactions or OMT program… the “unlimited” bond buying program the ECB announced last September and which supposedly “ended” the EU Crisis.

Here’s the key section from the article:

The positive effects of the Outright Monetary Transactions, or OMT, program are “already visible,” Joerg Asmussen, a member of the ECB’s governing board, said in testimony before Germany’s Constitutional Court. He added that the program is not aimed at replacing the market, rather to address aberrations, and is limited in scope.

“The design of the OMT makes it obvious that the program is de facto limited, for example by being restricted to short maturities and the therefore limited pool of bonds which can be bought,” he said.

So far the ECB hasn’t bought any government bonds under the OMT program, set up at last fall to lower borrowing costs for Italy and Spain and prevent them from have to leave the euro zone. The mere presence of the program been enough to calm bond markets worried about the countries’ ability to keep paying their debts.

http://online.wsj.com/article/BT-CO-20130611-706041.html?mod=googlenews_wsj

So… Europe was “saved” by a program that hasn’t officially DONE ANYTHING? Put another way, the OMT program saved Europe simply by “existing?”

Folks, this is the clearest indication of total and complete insanity you will ever see: Central Bankers proclaiming that they saved a €17 trillion economy and €34 TRILLION banking system simply by announcing a program. Not actually doing anything, just announcing a program.

The insanity gets even worse… just a few paragraphs later, we find the following:

He [Asmussen] rejected criticism that the ECB is trying to artificially create interest rate convergence in the euro zone, which critics say would remove incentives from euro zone governments to reform their economies. Instead, he said, the ECB aims to curb “unjustified peaks” in euro zone bond yields.

For the program to be effective, he added, the ECB needs to send a “strong signal” that OMT bond purchases are unrestricted. He said there was no danger that the program, if deployed, would cause inflation.

http://online.wsj.com/article/BT-CO-20130611-706041.html?mod=googlenews_wsj

Here we are told that the Europe which was allegedly already “saved,” will only truly be saved if the ECB can buy ANY and ALL EU sovereign bonds that it wants… Oh, and doing this won’t result in inflation…

It’s ironic because monetizing any and all bonds was precisely what caused Weimar Germany. The fact that the ECB wants to do this in order to curb “unjustified peaks” in totally bankrupt, insolvent EU sovereign nations tells you all you need to know about the EU…

Namely:

1)   The Crisis is not over and will actually get even worse in the coming months.

2)   The folks in charge of solving the Crisis are either totally incompetent or liars.

3)   The EU is doomed.

The writing is right there on the wall for everyone to see: the EU was “saved” by a bluff. And now that it’s time to actually start putting figures to the proposal, ECB officials are lying through their teeth.

If you’re looking for investment strategies on how to play this mess, you simply cannot do better than my Private Wealth Advisory newsletter. During the first round of the EU Crisis, we locked in 72 STRAIGHT winners and NOT ONE single loser over a 12 month period.

Indeed, we’ve just begin a new winning streak, with gains of 6%, 8%, 12%, 21%, and 28%… all in the last month alone.

And we’re doing this with ETFs and stocks… nothing fancy… just expert stock picking and market timing.

To take out a trial subscription to Private Wealth Advisory and start putting my stock picking expertise to work for you…

Click Here Now!

Best Regards,

Graham Summers

 

 

 

 

Disclaimer: The information contained on this website is for marketing purposes only. Nothing contained in this website is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this website constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. 

Opinions and estimates expressed on this website constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. 

Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email. 

Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. 

Phoenix Capital Research is not responsible for the content of other websites or emails to which this one may be linked and reserves the right to remove such links. OmniSans Publishing LLC and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. Phoenix Capital Management, Inc.
What Happens When the Everything Bubble Bursts?
  • By trying to corner the bond market (risk-free rate)
  • the Fed has created a bubble in everything
  • We call this THE EVERYTHING BUBBLE
  • Reserve your copy of our Executive Summary
  • To prepare for what's coming down the pike!
Your contact information will never be rented or sold to anyone EVER.