Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Gold Stocks Vs Gold – Not A Good Bet - 15th Dec 19
Silver Price Remains in 'Corrective Downtrend' - 15th Dec 19
Amazon - Snow Falling Effect Christmas Lights Outdoor Projector Review - 15th Dec 19
How to FIX Dirty Disk Windows Hard Drive Volume Error 0X80071AC3 - 15th Dec 19
Raffaele Riva and AUREA Are Breaking New Ground in Financial Services Across Europe  - 15th Dec 19
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Can Government Debt Crisis Lies Calm the Financial Markets?

Politics / Global Debt Crisis Sep 11, 2011 - 07:05 AM GMT

By: Mike_Shedlock

Politics

Best Financial Markets Analysis ArticleThe question of the day (for which everyone should know the answer) is Can Government Lies Calm the Markets?

In spite of the fact most of us realize lies will not help, and most often makes matters worse, governments repeatedly resort to lies, platitudes, and wishful thinking.


Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister admitted as such in his statement "When it becomes serious, you have to lie"

Things are clearly serious, so everyone should expect lies, and lies we have in spades.

MarketWatch reports G-7 seeks to calm market fears on Europe, banks

The finance ministers and central bankers of the Group of Seven richest industrial countries sought late Friday to calm market fears about Europe's debt crisis.

A senior U.S. official told Dow Jones that the G-7 leaders spent most of their time behind closed doors dissecting Europe's problems.

The group trumpeted the EU's July 21 agreement to ease financial tensions, saying it would make the European Financial Stability Fund more flexible. At the same time, the euro-zone countries reaffirmed their "inflexible determination" to honor their sovereign debts and their commitments to sustainable fiscal policies and structural reforms.

If G-7 really has "inflexible determination" in the face of default of Greece, then they are not doing what they should be doing, which is to prepare for a Greek default and exit of Greece from the Eurozone. For additional comments please see Common Sense from Eurozone Member Estonia: "Illogical to Exclude the Possibility of Bankruptcy".

This of course leads to the second question: Is "inflexible determination" a lie or just plain stupidity?

MarketWatch: The G-7 said that their central banks "stand ready to provide liquidity to banks as required.... We will take all necessary actions to ensure the resilience of banking systems and financial markets."

Mish: That paragraph is a set of half-truths and lies. The half-truth is the ECB will most assuredly attempt to provide liquidity.

The problem is banks face capital shortfalls. And regarding capital shortfalls the banks, the ECB, and the EU are all in stupefied denial even after Christine Lagarde, new head of the IMF stated banks were undercapitalized. See Lagarde shows independence from Europe as IMF chief .

Sadly Lagarde may have shown independence but the article points out she was immediately attacked by banks for her statements. Christian Noyer, head of the Bank of France, said in response "Either she had been misinformed by her staff at the IMF, that's a possibility, or she did not have French banks in mind." Yeah right.

MarketWatch: The group also said it would maintain close consultations about exchange markets.

That statement is undoubtedly true, but the implication is not especially pretty. Besides, what can they do but monitor things? If they could do anything the DAX (German equities market) would not be in freefall.

MarketWatch: After the meeting, German Finance Minister Wolfgang Schaeuble dismissed a report by Bloomberg News that German officials were readying a plan to recapitalize German banks should their Greek holdings overcome balance sheets.

Schaeuble insisted that the agreement reached with Greece in July was still the focus of the government. "To speculate over other outcomes is pointless," he said, according to Dow Jones.

Mish: Schaeuble's, statements are blatant lies or seriously discomforting truth. In this case, it is hard to know precisely which. I suspect lies (and we should all be hoping for lies) because unless the EU, ECB, and other government officials are making contingency plans for a Greek bankruptcy, there are going to be some very serious consequences soon.

MarketWatch: European Union Commissioner for Economic and Monetary Affairs Olli Rehn told reporters after the G-7 meeting that European banks were better capitalized than they were a year ago.

Mish: There's a lie, especially when the new head of the IMF is willing to admit banks need to be recapitalized.

MarketWatch: The G-7 statement said that countries must find a way to support the global recovery given the clear signs of a slowdown: "Given the still-fragile nature of the recovery, we must tread the difficult path of achieving fiscal adjustment plans while supporting economic activity, taking into account different national circumstances."

Mish: That is the impossible dream, yet probably an implied lie as well.

MarketWatch: U.S. officials said that the G-7 offered strong support for President Barack Obama's $450 billion jobs plan.

Mish: That statement is believable, yet the implications are disastrous for the US if implemented. Everyone wants the US to dig a deeper debt-hole and wreck its economy for the benefit of the rest of the world.

MarketWatch: ECB President Jean Claude Trichet told reporters that Stark resigned for personal reason, Dow Jones said.

Mish: That is a blatant lie by Trichet. Stark did not leave for personal reasons, nor did Axel Weber. Neither wanted to go down with a sinking Euro ship. Please see Germany Prepares "Plan B" Default; Top ECB Official Resigns; German-Italy Bond Spreads Widen Again; Dollar Soars, European Equities Hammered

MarketWatch: Bundesbank President Jens Weidmann said many of the factors that affected the German economy in the second quarter were only temporary and that no new stimulus was needed.

Mish: That is a blatant lie by Weidmann. Europe is imploding, austerity measures without reforms will not help at all, and austerity measures with reform will take a long time to work. There is no way the vaunted German export machine keeps humming along in this global backdrop. The only way "temporary" might be construed as true is if Weidmann means "years".

Obama Lies to Congress and the Nation

While on the subject of lies, there were plenty of them in Obama's address to Congress. Please see Dissecting the Lies in Obama's $447 Billion "Shock-and-Awe" Reelection Ploy; Dead-on-Arrival in Congress? Alternative Proposal Will Not Cost a Dime

Can Government Lies Calm the Markets? It hasn't worked recently as the public and the markets are both fed up with lies. Unfortunately, lies are all the Fed, the ECB, and governments have to offer.

Progress on badly needed structural reforms languishes in favor of "impossible dreams", failed stimulus ideas, wishful thinking, and a mass of blatant lies.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2011 Mike Shedlock, All Rights Reserved.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules