Via Warren Mosler.  No comment needed although I will add that I have talked to a few people based in Europe who told me that they were seeing a decent bid in Netherlands and German Bunds today.  Regardless, I think the sentiments Warren passes along are representative of growing concerns in the region and explain exactly why we’re seeing the yields blowout in Belgium, France, Spain, etc:

I just received this.
Seems money managers with fiduciary responsibility are holding off on buying any euro member securities since the 50% Greek haircuts were announced.

Our Trading Desk reports “mayhem” in the AAA Eurozone markets
– France 11bps wider
– Netherlands 6bps wider
France now 178bps over Germany
Increasing talk/fear of Eurozone break up and capitulation trades in AAA markets are widespread.
We are seeing no real demand for anything – even Germany.
Tomorrow’s Shatz auction looks a big ask with a yield of 30bps and no risk appetite out there.



Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Leverage

    So we are moving to the end game.

  • LRM

    Thanks for the insights on this matter.
    The North American Equity markets did not seem to price this in today. Maybe the Euro investors are moving their money into NA Equity and this is helping to hold current levels. But is the volume high enough to account for this??
    Looks like it is up to Germany to decide to let the ECB “print”

  • LVG

    Cullen, have you responded to this anywhere? I was hoping you might. Thanks. http://fofoa.blogspot.com/2011/11/moneyness.html

  • El Viejo

    Pretty good BBC interview/discussion of Euro debt.

  • http://www.pragcap.com Cullen Roche

    I touched on it here. How long do these hyperinflationists have to be wrong before people start to ask themselves if their analysis is flawed? I mean, get a load of this. In 2008 he says hyperinflation is imminent. And then when he’s horribly wrong he moves the goalposts again and again. Current prediction. 2012. That will be wrong as well and he’ll move the goalposts again. But people love having the shit scared out of them so his readership appears to be growing. It’s as if people love being lied to, abused and wrong. It would be funny if the analysis wasn’t so ridiculous. It’s good for a laugh though if you like seeing my name smeared all over the place.


  • chewitup

    Randy Wray has written about credit forgiveness being necessary through history. It’s the only way we can carry on as humans. Don’t know if it applies yet as ECB keeps buying bonds as needed. Stay tuned.

  • Barbra

    I’m impressed you were able to get through it. I couldn’t. Everything written over there is one big celebration of himself. There is only so much eye rolling I can do.

    I’m not pleased though at the recent attacks targeted at you. Only I can do that.

  • LRM

    Where do you place BASS on the economic theory scale.
    Do you feel he understands the way the money system works?
    He seems to have made successful bets so far but he did stock up on a big load of gold for a university endowment fund so maybe he is covering his inflation risk
    Why does gold go up in a BSR if there is no or minor risk of inflation?

  • Oroboros

    I don’t pretend to agree with everything said in this video I found scrounging the net, but fairly prescient nonetheless …


    Then look at when it was posted. Could have been posted yesterday. Almost nothing has changed in all this time. Amazing.

  • JWG

    I thought FOFOA was engaging with you in vigorous debate; debating you cedes you authority. This kind of back and forth is how both sides work out and improve their analysis. He seems to admit that operationally MMT is an accurate descriptor, but he asserts that the world is more complex than the variables referenced in the descriptor. When he talks about the “physical plane” I think about my own concern with herding behaviors and the madness of crowds as being variables that MMT does not really account for. MMT gives us the operational truth, and I am a believer, but is it the whole and complete truth? I doubt it. Even the tin foil hat crowd occasionally offers up nuggets of wisdom.

    One of the reasons that mainstream economists laugh off MMT is because they are too embarrassed to admit that they were wrong on things like “banks lend reserves” and other obvious gaffes. They cannot admit that the MMTers were correct on operational realities (and the Euro!) and so they pretend that MMTers are crackpots. The better path is to have an open mind and take wisdom where you find it.

    As for Eurozone debt, Jose on this site recently noted that even German Euro debt has forex and redenomination risk if Germany leaves the Euro and reinstates the D-Mark. Once the markets fully realize this, even German Euro debt will start to crack. If this goes on much longer, it may be too late for the ECB to intervene as the tsunami nears the shore.

  • Andrew P

    What the Germans really think about Greece and Italy


    worth a read.

  • http://www.pragcap.com Cullen Roche

    If people want to engage me in honest debate they should avoid starting that debate with personal attacks. Attacking me personally shows that their argument is either weak or they’re not interested in real productive discourse.

  • Dr. Oliver Strebel

    Sure, and the end game will last for a decade or so ;).

  • anon

    Well said.

    Had the hyperinflationistas taken their own predictions of a crash of US treasury bonds seriously and had they invested based on it they’d be pretty much bankrupt today.

    (Maybe they are and are watching from the sidelines, this would explain their extreme vitriol.)

  • Nils

    Long Gold at the same time sould have saved them.

  • Nils

    Arguably you can’t say that the average German is invited to many conferences of that caliber. Just ask any average worker if they think they are better of now than they were under the Euro. Of course the high level executives and those on the upper echelons of government do better. It’s completely idiotic to ask two people and conclude that Germans are optimistic and happy about the situation.

  • Dr. Oliver Strebel

    Is it based on a poll or is it just a ridiculous attempt of defamation created out of thin air LOL?

    Recent poll in that direction: 41 % of Germans want Greece to leave the EMU, but only 13 % want Italy to leave EMU. This fact is quite incompatible with the obscure statements in the article.

  • Dr. Oliver Strebel

    Anonymous source spreads rumours like: “We are seeing no real demand for anything – even Germany.
    Tomorrow’s Shatz auction looks a big ask with a yield of 30bps and no risk appetite out there.”


    In reality todays yield on 2y Bundeschatz maturing Dec 2013 was 0.39 %. This is quite compatible with the 5y yield of 1.0 % some two weeks ago.

  • El Viejo

    I think Bass shoots honest and straight and so he makes it into my 2nd tier of people with opinions. But of course honest people can be wrong. I know he is concerned about inflation and is a gold bug. I am not so much, but I was interested in close up opinions on European debt and how they were going to deal with it and that is why I posted the BBC video. I do not get my macro theory from Bass.
    This might be more revealing on Bass the man:

  • Roger Ingalls

    Interesting guy, that Farage.

    Makes you wish that political debate (and monetary understanding) in US was up to that standard.

    Thanks for posting.

  • anon2

    Unless instead of synthetically shorting T-bonds like you impliedly suggest, they’d just bought physical gold.

    Monday, January 14, 2008 – GOLD ABOVE $900
    Monday, March 17, 2008 – GOLD ABOVE $1000
    Monday, November 9, 2009 – GOLD ABOVE $1100
    Tuesday, December 1, 2009 – GOLD ABOVE $1200
    Tuesday, September 28, 2010 – GOLD ABOVE $1300
    Wednesday, November 9, 2010 – GOLD ABOVE $1400
    Wednesday, April 20, 2011 – GOLD ABOVE $1500
    Monday, July 18, 2011 – GOLD ABOVE $1600
    Monday, August 8, 2011 – GOLD ABOVE $1700

  • Bond Vigilante/Willy2

    FOFOA is a known (Hyper-)inflationista. He gets a number of things right, like that China has allowed the US to get into debt much deeper (remember Paul Volcker at PRAGCAP ??) during the 2000s but he fails to connect ALL the dots correctly.