Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

What Do The Euro Crisis Summit Volcanic Eruptions Mean? Pyroclastic Flow Next

Politics / Euro-Zone Oct 24, 2011 - 04:29 AM GMT

By: DK_Matai


Best Financial Markets Analysis Article1. The summits of European leaders and finance ministers happening this weekend appeared to be filled with despair as personal relations amongst major European leaders -- most notably the Germans and French -- collapsed much further. In parallel, Anglo-French relations also deteriorated as British prime minister Cameron became embroiled in a furious row with French president Sarkozy over Britain's role in talks to resolve the euro crisis. The heated exchange between Cameron and Sarkozy was so bad that it held up the conclusion of the EU-27 summit for almost two hours.

The French president expressed rage openly in regard to the constant criticism and lectures from UK government officials. Sarkozy bluntly told Cameron, "You have lost a good opportunity to shut up. We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings." Those witnessing the angry exchanges said Cameron insisted that the package being adopted on Wednesday by the 17 eurozone countries had serious implications for non-euro countries amongst the EU-27 and their interests must be safeguarded as well. The European Union is also facing a rebellion from Italy, Spain and other smaller members over "imperious diktats" issued from Berlin and Paris. Post euro summit volcanic eruptions, is a pyroclastic flow next?

Euro Summit Volcanic Eruptions: Pyroclastic Flow Next

2. New EU Treasury? Herman Van Rompuy, president of the European Council, angered many Eurozone countries by making confidential proposals for the creation of a European finance ministry at the same summit. His plan for a unified EU treasury was presented as the only solution to the problem of countries spending more than the euro can sustain, according to many Eurozone officials. This new proposal would mean that a centralised body would be able to override national budgets and enforce cuts on profligate governments. This measure is proving to be highly unpopular already, as it goes much further than any vision of the EU's founding fathers who drew the line at yielding fiscal and military sovereignty of member states. Further, Van Rompuy suggested that the EU finance ministry should be based in either Frankfurt or Paris, giving the indelible impression to smaller EU members that they would be put in a position of submission. From the perspective of most EU members, they might as well conclude that they either do not matter or they do not have a voice.

3. No Grand Solution: Interpersonal relations between eurozone leaders hit an all-time low, reflecting sharp disagreements between Germany and France over using the ECB to bailout the euro and presenting an additional obstacle to finding a "grand solution" to Europe's debt crisis. France originally wanted the fund to be allowed to tap the massive cash reserves of the European Central Bank which is an option that Germany has rejected altogether. Without the ECB's firepower, the options are ugly with too much reliance on leveraging and complex financial instruments -- derivatives and synthetic constructs -- that the EU has previously blamed for causing the initial banking crises in 2007-08.

4. Acrimony: France and Germany remain deeply divided, and it's dawning on everyone there may be no good solution that :

a. Allows the European Financial Stability Facility -- EFSF -- to keep its firepower;
b. Greece to avoid a catastrophic default; and
c. The banks to avoid getting crushed as a result of that default and associated contagion.

5. The deep rift between Paris and Berlin is multi-dimensional and not just restricted to the immediate single currency crisis. It includes matters such as:

a. Management of foreign and defence policy including relations with the Middle East, Russia and Central Europe;
b. Nuclear power phase out in Germany and nuclear expansion in France; and
c. The future of the European common agricultural policy.

Further, both French and German diplomats agree that this is a crisis of leadership and perhaps very mediocre characters are in charge on both sides of the Rhine and Rhone.

6. Words used to describe the Euro summit over the weekend now include:

a. "Grim";
b. "Worst mood ever seen"; and
c. "Complete mess."

7. IMF threatening to extricate itself post grim warnings:

a. A joint report by the EU and the International Monetary Fund (IMF) now warns that, without a default, the Greek debt crisis alone could swallow the Eurozone's entire �440 billion bailout fund -- leaving nothing to spare to help the affected banks of Italy, Spain and France as well as other Eurozone members.

b. Christine Lagarde has said the IMF may no longer be willing to pick up a third of the total bill for rescuing Greece -- a contribution worth �73 billion -- unless European banks were prepared to write off voluntarily at least 50 percent of the Greek debt, although in practice this could easily cross 75 percent, which the market is discounting anyway.

c. France and the European Central Bank (ECB) have both been resisting any talk of a Greek debt default for fear it would damage French banks and rock the stability of their financial institutions. Notwithstanding French objections, a large Greek haircut is now inevitable.

8. Double Whammy and Credit Default Event: European Union leaders are now likely to ask banks voluntarily to accept much bigger losses on Greek bonds to ease the pressure on that country and to raise billions more in capital to bear those losses simultaneously. If the banks were not to submit voluntarily, the Eurozone governments may simply force deep hair cuts, which would trigger a credit default event.

9. Wolfgang Schaeuble, Germany's finance minister, has taken the "I told you so" approach throughout the summit. He did not mince words and strengthened his reputation for harshness. Many European Finance ministers found him to be unbearable. He was the first to call for an "orderly" default for Greece 18 months ago, at a time when the cost of such a move was less than one third of the price today.

10. Francois Baroin, the young French finance minister tried to hit back. He complained that the IMF's default medicine would hit France the hardest because his country's banks are most exposed; and France's "untouchable" AAA rating could be compromised. Christine Lagarde, who held Monsieur Baroin's post until taking up the IMF job, "shut him up" by brandishing the IMF report and pointing to its detailed figures. "She really slapped him down," according to senior diplomats.


Are Merkel-Sarkozy's previous expectations of a big breakthrough during these summits realisable? If an unstoppable force meets an immovable object, what happens? The global financial markets may be advised to expect a pyroclastic flow as a result of the recent euro summit volcanic eruptions.

Do the global financial markets genuinely expect a deal during these European summits? The EU arrogance to attempt usurping the sovereignty of all Eurozone members was bound to reach its destructive apex sooner or later. This said, the Eurozone powers may yet walk back from the brink before Wednesday evening and produce promises of further summits to resolve remaining differences. In this way, the horrible muddle through may continue.

History may record the most significant outcomes of the recent euro summit volcanic eruptions to be:

1. The diminished influence of president Sarkozy in particular and France in general;
2. France having to step back from the common European pool of funds and fixing its colossal banking problems by itself;
3. As a European Union founder country, whatever France enjoyed by way of special handouts from Brussels, may now be compromised;
4. The bitter confrontation of France with Germany without any tangible success is signalling a significant re-alignment of the power structure within Europe;
5. The bitter row between France and Britain in regard to the Eurozone crisis is also going to have monumental ramifications for their joint defence arrangements;
6. Less powerful members of the Eurozone are finally learning that the French-German monopolisation of the European power structures runs counter to their own interests;
7. The enormous gaps which exist between European Union member countries in regard to their domestic political and economic considerations;
8. The marker in the sand when the forces of European fragmentation -- or "Realpolitik" -- began to overtake the forces of cohesion;
9. The recent events highlight perils facing the European "political and economic" Union on the back of the unstoppable forces of Eurozone fragmentation; and
10. Other world leaders -- like those of the US and China -- taking note that there is not much they can do to repair the cracks now appearing within the Eurozone.

Note: In case you are wondering what a pyroclastic flow means... A pyroclastic flow is a fluidised mixture of solid to semi-solid fragments and hot, expanding gases that flows down the flank of a volcanic edifice post eruption. A pyroclastic flow can be a fast-moving current of superheated gas, which can reach temperatures of about 1,000 �C (1,830 �F), and rock -- collectively known as tephra -- which reaches speeds moving away from a volcano of up to 700 km/h (450 mph).

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

We welcome your participation in this Socratic dialogue. Please access by clicking here.

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2011 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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